Freddie Mac Single-Family Seller/Servicer Guide 2101.4 — Financial reporting

Freddie Mac Single-Family Seller/Servicer Guide 2101.4 — Financial reporting

Effective 2024-03-31 · Freddie Mac's stamp for this section

(a) All Seller/Servicers The Seller/Servicer must at all times comply with the following reporting requirements: ■ Each Seller/Servicer must submit annual audited financial statements to Freddie Mac, except that: ❑ A federally insured depository institution need not submit such statements, and ❑ A Seller/Servicer that is approved only to sell Mortgages to Freddie Mac may submit Reviewed Financial Statements ■ Each Seller/Servicer that is a subsidiary of another institution and that is required to submit audited financial statements (as noted above) may submit audited financial statements prepared at the Seller/Servicer level or at its parent level, with a consolidating worksheet ■ An annual audited report on internal controls is required only if audited financial statements are required by Freddie Mac. This internal control report should be a separate report stating whether the independent public accountant (IPA) noted any material weaknesses during the audit of the financial statements. The report should be prepared in accordance with Interpretation 1 of Statement and Auditing Standards (SAS) No. 60, “Communication of Internal Control Structure Related Matters Noted in an Audit,” titled, “Reporting on the Existence of Material Weaknesses” (AICPA, Professional Standards, vol. I, AU sec. 9325). If audited financial statements and internal control reports are required by Freddie Mac, the audited financial statements and internal control reports must be prepared by an IPA who is a licensed certified public accountant (CPA) or a public accountant licensed on or before December 31, 1970, who complies with the applicable provisions of the public accountancy law and rules of the jurisdiction(s) where the audit is conducted and the jurisdiction(s) in which the IPA is licensed. Freddie Mac reserves the right to require audited financial statements, audited reports on internal controls, additional financial statements and other information relevant to the Seller/Servicer’s eligibility, including audited or Reviewed Financial Statements for the Seller/Servicer’s parent, subsidiaries and affiliates, at any time and regardless of the Seller/Servicer’s annual eligibility reporting requirements. (b) Seller/Servicers that are Large Non-Depository Institutions All Large Non-Depository Institutions, as defined in Section 2101.2, must obtain an assessment of the Seller/Servicer’s performance and creditworthiness by a qualified, independent third-party on an annual basis. The assessment must be made available to Freddie Mac upon request, must substantiate that the Seller/Servicer has adequate capacity to perform its financial obligations in an adverse stress environment and must meet the following criteria: ■ One primary Servicer Rating or master Servicing Rating, as applicable, as defined in Section 2101.2, for Large Non-Depository Institutions that have greater than or equal to $50 billion in Servicing UPB; and ■ One primary Servicer Rating or master Servicing Rating, as applicable, and one thirdparty Long-Term Senior Unsecured Debt Rating or Long-Term Corporate Family Rating, each as defined in Section 2101.2, for Large Non-Depository Institutions that have greater than $100 billion in Servicing UPB; and ■ One primary Servicer Rating or master Servicing Rating, as applicable, and issued by two Rating Agencies, each of which must issue either a third-party Long-Term Senior Unsecured Debt Rating or Long-Term Corporate Family Rating for Large NonDepository Institutions that have greater than $150 billion in Servicing UPB Additionally, Large Non-Depository Institutions must submit to Freddie Mac, annually on or before March 31, a capital and liquidity plan that describes how the Seller/Servicer intends to manage its capital and liquidity consistent with Freddie Mac requirements. Capital and liquidity plans must be submitted to [email protected] and must, at a minimum: ■ Include a description of the Seller/Servicer’s corporate governance over the capital and liquidity planning process, such as oversight responsibilities of Senior Management and its board of directors, and a discussion of the Seller/Servicer’s risk management framework; ■ Describe processes to monitor and measure liquidity risks, such as business activity reports and financial forecast and cashflow projections; ■ Contain capital and liquidity contingency funding plans and provide for testing and reaffirmation of such plans at least annually; ■ Provide for an annual liquidity stress test, including a stress test of the value of Servicing Contract Rights in an adverse scenario (1) developed by the Seller/Servicer or (2) that may be prescribed by Freddie Mac, or both. The Servicing Contract Rights stress test may be conducted either in-house or using a third-party vendor; and ■ Require notice to Freddie Mac within five (5) Business Days following any material change to or material deviation from the plan. During times of stress, material changes must require immediate notification within one (1) Business Day.

Source: Freddie Mac Single-Family Seller/Servicer Guide 2101.4 — Financial reporting · source URL · snapshot 4c94f67729042dd6