Freddie Mac Single-Family Seller/Servicer Guide 2101.2 — Acceptable Net Worth and other financial requirements

(a) Defined terms Seller/Servicers should be familiar with the following terms used in this section as they relate to financial requirements: ■ Agency Mortgage Servicing: The aggregate Residential First Lien Mortgage Servicing UPB of all Mortgages serviced for the Enterprises and Ginnie Mae ■ Enterprise: Freddie Mac and Fannie Mae, each an “Enterprise” and collectively the “Enterprises.” ■ Large Non-Depository Institutions: Non-depository institutions with $50 billion or more in Residential First Lien Mortgage Servicing UPB plus Other Servicing UPB as determined at the end of each calendar quarter. ■ Liquidity: Cash and cash equivalents (unrestricted), certain unpledged investment grade securities that are available for sale or held for trade (including single-family mortgagebacked securities backed solely by Agency Mortgage Servicing, obligations of the Enterprises, and Treasury obligations), and 50% of committed/unused Agency Mortgage Servicing advance lines of credit. ■ Long-Term Senior Unsecured Debt Rating: A rating assigned to a financial obligation with an original maturity of one year or more that reflects both on the likelihood of a default on contractually promised payments on senior unsecured debts and the expected financial loss suffered in the event of default on such debts from a Rating Agency. ■ Long-Term Corporate Family Rating: A long-term rating that reflects the relative likelihood of a default on a corporate family’s debt and debt-like obligations and the expected financial loss suffered in the event of default from a Rating Agency. ■ Other Servicing UPB: Using the fields from the Form 1055, Mortgage Bankers’ Financial Reporting Form (MBFRF), the outstanding UPB of a Seller/Servicer’s portfolio of one- to four- unit residential First Lien Mortgages the Seller/Servicer is contractually obligated to service for all investors other than the Enterprises and Ginnie Mae, plus the following regardless of the investor: ❑ Second lien Mortgages, ❑ Funded home equity lines of credit, ❑ Reverse Mortgages, plus ❑ Construction and land development Mortgages This does not include the outstanding UPB of Mortgages serviced under a subservicing arrangement. ■ Rating Agency: An entity that is a “Nationally Recognized Statistical Rating Organization” as defined by Section 78c(a) of Title 15 of the United States Code (15 U.S.C. 78c(a)). ■ Residential First Lien Mortgage Servicing UPB: Using the fields from the Form 1055, Mortgage Bankers’ Financial Reporting Form (MBFRF), the outstanding UPB of a Seller/Servicer’s portfolio of one- to four- unit residential First Lien Mortgages the Seller/Servicer is contractually obligated to service for the Enterprises and Ginnie Mae, as applicable, excluding: ❑ Funded home equity lines of credit, ❑ Reverse Mortgages, plus ❑ Construction and land development Mortgages This does not include the outstanding UPB of Mortgages serviced under a subservicing arrangement. ■ Servicer Rating: An evaluation of a servicer for its capacity to carry out servicing business, which is different from evaluations of financial instruments or credit standing of corporations, from a Rating Agency. Servicer Ratings may be conducted based upon the type of servicing actions performed, including evaluations for entities that act as primary servicers, special servicers or master servicers. ■ Small Seller: A Seller that originates $1 billion or less in one- to four- unit residential first lien Mortgages (excluding reverse Mortgages, one-to four-unit residential construction and land development loans to home buyers, and lot loans to consumers) in the most recent four-quarter period. ■ Tangible Net Worth: Total equity (as determined by generally accepted accounting principles (GAAP)) less receivables due from related entities, less goodwill and other intangible assets, less carrying value of pledged assets net of associated liabilities, less deferred tax assets net of associated deferred tax liabilities. Note: If the deferred tax liabilities are greater than the deferred tax assets, then the deduction from the Tangible Net Worth will be zero.

(b) Seller/Servicers that are depository institutions Seller/Servicers that are depository institutions must maintain at all times a Tangible Net Worth of $2,500,000 plus a dollar amount equal to or exceeding the sum of: ■ 25 basis points of that portion of the Seller/Servicer’s Residential First Lien Mortgage Servicing UPB serviced for the Enterprises, ■ 25 basis points of the Other Servicing UPB, plus ■ 35 basis points of that portion of the Seller/Servicer’s Residential First Lien Mortgage Servicing UPB serviced for Ginnie Mae Seller/Servicers that are depository institutions must maintain compliance with their applicable capital and liquidity requirements imposed by their regulators.

(c) Seller/Servicers that are non-depository institutions Seller/Servicers that are non-depository institutions must maintain at all times the Tangible Net Worth requirements applicable to depository institutions above, and must also maintain: ■ A Tangible Net Worth/total assets ratio greater than or equal to 6%, where total assets are determined in accordance with GAAP, and ■ A base Liquidity of eligible assets equal to or exceeding the sum of: ❑ 7 basis points of that portion of the Seller/Servicer’s Residential First Lien Mortgage Servicing UPB serviced for the Enterprises, if the Seller/Servicer remits (or an Enterprise draws) interest or principal, or both, as scheduled, regardless of whether principal or interest has been collected from the Borrower, ❑ 3.5 basis points of that portion of the of the Seller/Servicer’s Residential First Lien Mortgage Servicing UPB serviced for the Enterprises, if the Seller/Servicer remits (or an Enterprise draws) the interest and principal only as actually collected from the Borrower, ❑ 3.5 basis points of the Seller/Servicer’s Other Servicing UPB, plus ❑ 10 basis points of that portion of the Seller/Servicer’s Residential First Lien Mortgage Servicing UPB serviced for Ginnie Mae ■ An origination Liquidity* equal to or exceeding 50 basis points of the sum of the following as reported by Seller/Servicer using the fields from the Form 1055, Mortgage Bankers’ Financial Reporting Form (MBFRF): ❑ One-to-four unit residential first lien (excluding reverse Mortgages, one-to-four-unit residential construction and land development loans to home buyers, and lot loans to consumers) Mortgages held for sale, at lower of cost or market, ❑ One-to-four unit residential first lien (excluding reverse Mortgages, one-to-four-unit residential construction and land development loans to home buyers, and lot loans to consumers) Mortgages held for sale, at fair value, plus ❑ UPB of interest rate lock commitments after fallout adjustments. *Note: These origination Liquidity requirements do not apply to Small Sellers.

(d) Seller/Servicers that are Large Non-Depository Institutions In addition to the Liquidity requirements specified in subsection (c) above, all Seller/Servicers that are Large Non-Depository Institutions must at all times maintain supplemental Liquidity equal to or exceeding the sum of: ■ 2 basis points of that portion of the Seller/Servicer’s Residential First Lien Mortgage Servicing UPB serviced for the Enterprises, plus ■ 5 basis points of that portion of the Seller/Servicer’s Residential First Lien Mortgage Servicing UPB serviced for Ginnie Mae

(e) Additional requirements Notwithstanding the above, Freddie Mac may, as it deems appropriate and in its sole discretion: ■ Modify a Seller/Servicer’s Tangible Net Worth requirement ■ Impose limitations, restrictions or qualifications on the sale of Mortgages to, or the Servicing of Mortgages for Freddie Mac by any Seller/Servicer, and ■ Impose additional financial requirements on any Seller/Servicer, including, but not limited to, (i) requirements relating to liquidity and profitability, regardless of the Seller/Servicer’s Tangible Net Worth, and (ii) the requirement that any Seller/Servicer execute and deliver a Collateral Pledge Agreement, in substantially the form and substance of Exhibit 104, whereby the Seller/Servicer will pledge certain collateral (whether cash, securities or otherwise), as pledgor, to Freddie Mac, as secured party, in such amount as determined by Freddie Mac, in its sole discretion Freddie Mac will provide the Seller/Servicer with notice of any modification to the Seller/Servicer’s Tangible Net Worth or other financial requirements, any additional requirements, and any limitations, restrictions or qualifications on the sale of Mortgages or Servicing of Mortgages.