Freddie Mac Single-Family Seller/Servicer Guide 1402.1 — Introduction to eMortgages; Seller/Servicer and Product Eligibility

An eMortgage is a Mortgage that is originated using an eNote. The Security Instrument and other Mortgage documents may be paper or Electronic Records. This section contains: ■ Introduction ■ Defined terms ■ Seller/Servicer eligibility and approval ■ Eligible eMortgage types and products

(a) Introduction Chapter 1402 sets forth Freddie Mac’s requirements for eMortgages. Seller/Servicers, custodians and System Providers must comply with these requirements to create, store, sell and service eMortgages. The requirements and specifications in this chapter are based, for the most part, on the requirements of E-SIGN and the UETA. (i) Interpreting requirements set forth in this Chapter 1402 Most types of Mortgages are eligible for delivery to Freddie Mac as eMortgages. Mortgages that are not currently eligible for sale to Freddie Mac as eMortgages are set forth in Section 1402.1(d). Seller/Servicers of eMortgages must comply with all selling and Servicing requirements of the Guide and the Seller/Servicer’s other Purchase Documents, as applicable, including the special requirements set forth in this chapter. With the exception of a Seller/Servicer’s obligation to comply with applicable law, the requirements set forth in this chapter prevail over conflicting or contradictory requirements in other chapters of the Guide or the Seller/Servicer’s other Purchase Documents with respect to any eMortgage. (ii) Complying with eMortgage requirements A Seller/Servicer must obtain Freddie Mac’s prior written approval, which it may provide in its sole discretion, to sell to and/or service eMortgages for Freddie Mac. This approval is a Purchase Document and may include additional restrictions, requirements, conditions or stipulations relating to the sale and/or Servicing of eMortgages. Seller/Servicers of eMortgages must ensure that they and their System Providers (and if applicable, Correspondents and/or Mortgage Brokers) comply with the requirements specified in this chapter. In addition, contracts between the Seller/Servicer and any System Providers (and if applicable, Correspondents and/or Mortgage Brokers) regarding the provision of eMortgage closing services and eNote Vault System services, must contain certain terms and conditions that may be prescribed by Freddie Mac in its approval or other Purchase Documents. The Seller/Servicer is solely, and, if applicable, with any Servicing Agent are jointly, responsible for any failure to comply with the provisions of the MERS® eRegistry membership agreement, including, but not limited to: ■ Any rules and procedures; and ■ Any liability that it, or its applicable Servicing Agent, or Freddie Mac incurs as a result of Seller/Servicer’s registration of (or failure to timely register) eNotes in the MERS eRegistry A Transfer of Control identifying Freddie Mac as the Controller of an eNote registered in the MERS eRegistry does not relieve the Seller/Servicer and, if applicable, any Servicing Agent, from its responsibility to comply with all applicable provisions of the MERS eRegistry rules, the Guide, and the Seller/Servicer’s other Purchase Documents.

(b) Defined terms Capitalized terms: Capitalized terms used in this chapter that are not otherwise defined in Sections 1401.1(b), 1402.1(b) or the Glossary shall have the meanings ascribed to such terms in E-SIGN and UETA. Defined terms: The following defined terms are used throughout Chapter 1402, other chapters of the Guide and the Seller/Servicer’s other Purchase Documents with respect to eMortgages: Defined terms related to Freddie Mac eMortgage requirements A AES The advanced encryption standard, which is a symmetric block cipher implemented in software and hardware to encrypt sensitive data. Alteration A change to the terms or conditions of a Record or Electronic Record and/or a change in the variable information added to the Record or Electronic Record after it is signed or, if it is not required to be signed, after it has been delivered. Authoritative Copy The copy of the Transferable Record (eNote) that has been registered in the MERS® eRegistry and is stored by the entity named in the Location specified in the MERS eRegistry. C Copy of the Authoritative Copy A copy of the eNote registered in the MERS eRegistry. Consumer Consent Form A form to be electronically signed by each Borrower prior to the Borrower’s use of an eClosing System. Control The authority of a Holder to manage and take action with respect to the Authoritative Copy of an eNote if a system employed for evidencing the transfer of interests in the eNote reliably establishes that the Holder is the Holder to whom the eNote was issued or transferred pursuant to Section 16 of UETA and Title II, Section 201 of E-SIGN. Controller The entity named in the MERS eRegistry that has Control of the Authoritative Copy of the eNote. Custodial Documents The Note or Authoritative Copy of the eNote and any Note or eNote addenda All other documents required to be delivered to the Document Custodian as identified in Section 6301.4(a)(ii) D Document Type Definitions (DTDs) Markup declarations that define a document type for a family markup language, such as hypertext or extensible markup language. Delegatee A member of the MERS eRegistry authorized by the Controller to perform certain MERS eRegistry transactions on the Controller’s behalf. Digital Signature The result of encrypting a Hash Value with a private key. Digital Signatures in the mortgage industry are also known as Tamper Seals, Tamper Seal Signatures and Tamper Evident Signatures. E Electronic Relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic or similar capabilities, as defined in the “UETA” and/or “E-SIGN”. eClosing System An Electronic system that uses computer hardware and software that provides a Borrower the ability to electronically sign some or all of the closing documents and applies a Tamper Seal. Electronic Payment Deferral Agreement Electronic Payment Deferral Agreement is an Electronic Record that complies with the applicable Payment Deferral requirements of the Guide, as set forth in and subject to Chapter 9203 and, solely for purposes of Chapter 1402, also includes Electronic Payment Deferrals for eMortgages. Electronic Record A “Record” created, generated, sent, communicated, received or stored by “Electronic” means, as defined in the “UETA” and/or “E-SIGN.” The term also includes a paper document converted into an Electronic Record. Electronic Signature An “Electronic” sound, symbol or process attached to, or logically associated with, a contract or other “Record” and executed or adopted by a person with the intent to sign the “Record,” as defined in the “UETA” and/or “ESIGN”. eModification Agreement eModification Agreement is an Electronic Record that complies with the applicable modification requirements of the Guide and includes, with respect to paper Notes, Electronic modification agreements and Electronic assumption and release of liability agreements under Chapters 9206 and 8406, respectively and, solely for purposes of this Chapter 1402, also includes Electronic modifications of eMortgages. eMortgage A Mortgage originated using an eNote. An eMortgage may also have an Electronic or paper Security Instrument and certain other paper or Electronic Records, which are part of the Mortgage File Documents. eStorage System An Electronic computer storage system for storing Electronic Mortgage File Documents safely, securely, confidentially in accordance with the Guide and other Purchase Documents. eNote An Electronic Record that would be a promissory note if it was issued in paper, and that the Borrower has agreed to issue it as a Transferable Record. eNote Vault System or eVault An Electronic storage system that uses computer hardware and software to store and maintain eNotes and other Electronic Records. E-SIGN The federal Electronic Signatures in Global and National Commerce Act (15 U.S. Code, Chapter 96). H Hash Value The result of a Hashing Algorithm and is a unique, fixed-sized computed value that represents any arbitrary length string (such as a document). Also known as message digests, hash codes, hash sums, or simply hashes. Hashing Algorithm A mathematical function that maps any arbitrary length string (such as a document) to a unique computed fixed length value. Since this value is unique to the document, if the document were altered, the result from applying the Hashing Algorithm to the altered document would be different from applying the mathematical function to the original document. The difference in results from the Hashing Algorithm indicates tampering of the data integrity of the original document. Holder A person described in Section 16(d) of UETA and in Title II, Section 201(d) of E-SIGN who has Control of a Transferable Record and who is named as the Controller in the MERS eRegistry. (Also known as Note Holder.) L Location The organization (business entity) named on the MERS eRegistry that stores and maintains the Authoritative Copy of the eNote either as Controller or as a designated custodian on behalf of the Controller. M MERS eDelivery A MERS® system (operated by MERSCORP Holdings, Inc.) that is used by MERS eRegistry members to deliver documents and data from one MERS eRegistry member to another using the same infrastructure, open system-to-system interface, and standards of the MERS eRegistry. MERS eRegistry The Electronic registry (operated by MERSCORP Holdings, Inc.) that serves as the system of record to identify the current Controller and Location of the Authoritative Copy of an eNote, and the Delegatee, if any, who is authorized by the Controller to make certain updates in the MERS eRegistry on behalf of the Controller. MERS eRegistration History An Electronic or paper printout of the record of all status changes and required actions that occurred during the life of the eMortgage as set forth in the MERS eRegistry. MISMO® Mortgage Industry Standards Maintenance Organization, which is the body created by the Mortgage Bankers Association of America (MBA) in October 1999 to develop, promote, and maintain voluntary Electronic commerce standards for the mortgage industry. Mortgage File Documents All Mortgage documents from the Mortgage closing (including paper or Electronic Records), including copies of the Custodial Documents, but not including the eNote or Authoritative Copy of the eNote, any eNote addendums, any ARM conversion instrument, any balloon/reset instrument, any modification agreements, assumption agreements (with or without a release of liability), power of attorney and any intervening or other assignments. P PIN A personal identification number. Pledged eMortgage A Pledged Mortgage that is an eMortgage. Pledged eNote An eNote related to a Pledged eMortgage. Process A series of actions or steps necessary to perform a particular task or meet a particular requirement. Except where applicable law or the context requires otherwise, a Process may be deployed through Electronic means or involve steps or actions that are non-Electronic or may involve a combination of both Electronic and nonElectronic means, steps or actions. R Record Information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form as defined in the “UETA” and/or “E-SIGN.” A Record may be a paper or an “Electronic” document. Remote Online Notarization A notarial act performed by means of an Electronic device or process that allows a notary public and a principal, who is not in the same physical location as the notary public, to complete a notarial act and communicate with each other simultaneously by sight and sound. RSA RSA Data Security, Inc., a developer and publisher of public key cryptography standards. S S/Key A one-time password system developed for authentication of a user to access certain operating systems where a user’s password is combined with a short set of characters generated by an offline device to form a single-use password that may never be used again. Secured Party Participant named on the MERS® eRegistry that has been sold, pledged, assigned, or granted a security interest in the eNote by the Controller. Secured Party Delegatee Participant authorized by the Secured Party to perform certain MERS eRegistry transactions for the eNote on the Secured Party’s behalf. SHA The cryptography application programming interface name for secure Hashing Algorithm. Smart Card Authentication Two-factor user authentication process that uses certain software and hardware to access the user’s digital private keys stored on a smart card placed into a smart card reader once the user supplies the requisite password or personal identification number. SMART Document An Electronic document created to conform to a specification standardized by MISMO. A SMART Document locks together data and presentation in such a way that it can be systemvalidated to guarantee the integrity of the document. There are different categories of SMART Documents as specified by MISMO. SSL Secure Sockets Layer, which is a standard security protocol used for establishing encrypted links between a web server and a browser in an online communication. System Either the eClosing System or eNote Vault System. Systems Both the eClosing System and the eNote Vault System. System Provider Entity providing a System, or any component of such System, used to create, register, sign, transfer, store, maintain, retrieve, and/or secure eNotes or other Mortgage File Documents. T Tamper Seal, Tamper Seal Signatures, Tamper Evident Seal and Tamper Evident Signatures Digital Signature applied to an Electronic Record. The Tamper Seal can be verified to ensure that no changes have been made to the Electronic Record since the seal was put in place. TLS Transport Layer Security, which is a cryptographic protocol that provides end-to-end communications security over networks and is widely used for internet communications and transactions. Transfer of Control Transfer, within an eNote registry, by a transferor with Control of an eNote, to a transferee, for the purpose of transferring the: (i) right, title, and/or interest in an eNote; and/or (ii) custody of an eNote. The purpose of a Transfer of Control must be provided in an agreement duly executed by the transferor and transferee. If the MERS eRegistry is the designated Note Holder registry, it means a change of Control and Controller. Transferable Record An Electronic Record as described in Section 16 of UETA and in Title II, Section 201 of E-SIGN. A Transferable Record is referred to herein as an eNote. U UCC Uniform Commercial Code, as amended from time to time, which is a model commercial transactions statute promulgated by the National Conference of Commissioners on Uniform State Laws (NCCUSL) and which has been published and distributed by members of NCCUSL to the states, territories, and possessions of the United States for enactment. UCC Article 3 governs negotiable instruments, including paper notes. UETA The Uniform Electronic Transactions Act of 1999, promulgated by the U.S. Uniform Law Commission for consideration and enactment by the States. Reference to the UETA herein, means the UETA as promulgated by the U.S. Uniform Law Commission or the UETA as enacted by an applicable State. X X.509 Internationally recognized standard for digital certificates that defines their required parts.

(c) Seller/Servicer eligibility and approval To sell eMortgages to Freddie Mac, a Seller/Servicer must: ■ Contact its Freddie Mac account representative to determine eligibility; and ■ Obtain Freddie Mac’s prior written approval Freddie Mac’s approval of a Seller/Servicer to sell eMortgages does not necessarily mean approval to service eMortgages for Freddie Mac or vice versa. The approval process to service eMortgages is detailed in Section 1402.5(a)(i). Before delivering an eMortgage to Freddie Mac, an approved Seller/Servicer of eMortgages must either: ■ Be approved as a Servicer of eMortgages; or ■ Be approved to engage in a Concurrent Transfer of Servicing involving eMortgages to a Transferee Servicer who has been approved to service eMortgages for Freddie Mac (see Section 1402.5(e)(i))

(d) Eligible eMortgage types and products Upon obtaining Freddie Mac’s written approval to sell eMortgages to Freddie Mac and subject to all applicable requirements of Chapter 1402 and the Guide, the Seller/Servicer may sell all Mortgage types and products eligible under the Seller/Servicer’s Purchase Documents to Freddie Mac as eMortgages, except for the following: ■ Mortgages secured by Mortgaged Premises located in Puerto Rico ■ Texas Equity Section 50(a)(6) Mortgages ■ New York Consolidation, Extension and Modification Agreement (“NYCEMA”) Mortgages. Note: An eMortgage may be refinanced into NYCEMA using the NYCEMA process provided in Section 1402.5(h). ■ Mortgages for which the Borrower is a Living Trust, or any Mortgage where a nonindividual entity is required to sign the eNote ■ Cooperative Share Loans ■ Section 184 Native American Mortgages where the Borrower is not an individual