Freddie Mac Single-Family Seller/Servicer Guide 3201.1 — Fraud prevention and detection measures

Freddie Mac Single-Family Seller/Servicer Guide 3201.1 — Fraud prevention and detection measures

Effective 2026-05-06 · Freddie Mac's stamp for this section

The Seller/Servicer must have in place comprehensive practices and procedures to prevent and detect fraud throughout each stage of the origination and Servicing of a Mortgage and in related real estate transactions. This section identifies fraud prevention and detection requirements related to: ■ Employee hiring and training ■ Origination and Servicing ■ Seller/Servicer’s in-house quality control program ■ Additional fraud mitigation resources Seller/Servicers must implement additional practices and procedures, as deemed necessary, to ensure that an effective fraud prevention and detection plan is in place. (a) Employee hiring and training The Seller/Servicer must have screening and hiring practices in place to ensure the integrity of its employees. Employees and any entity or individual engaged to handle or perform functions typically handled by employees, and in a position to notice or report fraud and suspected fraud, must receive training in each applicable area of the Seller/Servicer’s mortgage business about: ■ Common and emerging fraud schemes ■ Red flags that may signal fraud and the need for more review The Seller/Servicer must communicate its procedures (including requirements of this chapter) for prevention, detection and reporting of fraud and suspected fraud to its employees and the entities and individuals referenced above. Parties engaged to handle or perform functions typically performed by employees and in a position to notice or report fraud or suspected fraud may include: ■ Contract underwriters ■ Contract processing services (including loan processors) ■ Contract quality control firms ■ Borrower outreach companies ■ Loss mitigation services ■ Collection companies The training must include periodic updates at least annually to ensure employees and parties referenced above are aware of emerging fraud scenarios. The Seller/Servicer must either provide the training directly, hire a third party to provide the training, or obtain an annual written verification from the engaged entity or individual confirming that training has already been received from another party in accordance with the requirements of this section. (b) Origination and Servicing (i) The Seller/Servicer must take the following minimum steps to prevent and detect fraud in the areas of origination and Servicing: ■ Escalate internally and properly investigate information received from any source that indicates suspected fraud. Sources can include: • Borrowers • Participants in the Mortgage transaction • Participants in the related real estate transactions • Servicing functions relating to a Mortgage or REO property • Loss mitigation activities or transactions, such as: ■ Forbearance plans ■ Loan modifications ■ Foreclosures ■ Deeds-in-lieu of foreclosure ■ Short sales of the underlying property ■ Investigate unusual patterns or discrepancies or other red flags, such as first and earlypayment defaults ■ Comply with Section 3101.1 regarding screening through the Freddie Mac Exclusionary List ■ Comply with all other Guide provisions relating to fraud prevention and detection Red flags identified in origination and/or Servicing may include, but are not limited to: ■ Origination: ❑ Collateral, appraisal and property fraud (e.g., flipping, flopping, over or under valuation, property condition) ❑ Misrepresentations (e.g., assets, liabilities/debt, occupancy, strawbuyer, employment, income) ❑ Identity theft ❑ Irregularities in the loan application or Mortgage documentation (e.g., false documents, forgeries, excessive gift funds) ■ Servicing: ❑ Potentially suspicious payment activity (e.g., structured cash payments, payments returned due to fraud, curtailments or large payments with unknown source of funds, payment kiting) ❑ Loan modification and foreclosure fraud (e.g., loan modification rescue schemes, misrepresentation of eligibility requirements) ❑ Debt elimination schemes (e.g., false identity theft claims, sovereign citizen fraud) ❑ Potentially suspicious or fraudulent payoffs (e.g., early payoffs, potentially suspicious or fraudulent wires, diversion of funds) Seller/Servicers must know the parties with whom they do business. ■ Sellers must approve, evaluate and monitor Mortgage Brokers, Correspondents, Mortgage Service Providers, appraisers, and property data collectors ■ Servicers must approve, evaluate and monitor appraisers and any third party to whom Servicing functions relating to a Mortgage or REO property are outsourced or assigned, including, but not limited to, any loss mitigation activities or transactions such as foreclosures, deeds-in-lieu of foreclosure or short sales (c) Seller/Servicer’s in-house quality control program Pre- and post-funding quality control reviews are an integral part of fraud prevention and detection in the mortgage process. In the event populations of loans are identified that have a reason to suspect fraud, discretionary samples must be used to identify and report any additional instances of suspected fraud. Seller/Servicers must comply with all other Guide provisions relating to quality control reviews, including Section 3402.2(a). The Seller/Servicer must periodically (at least annually) update its quality control policies and procedures to address emerging fraud scenarios. (d) Additional fraud mitigation resources Information on preventing, detecting and investigating potential fraud and other suspicious activity is available on Freddie Mac’s website at https://sf.freddiemac.com/working-withus/fraud-prevention/overview. For additional information, consult the Freddie Mac fraud hotline at 800-4FRAUD8 (800437-2838) or the Freddie Mac Exclusionary List, which is accessible via Freddie Mac Gateway®.

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