Freddie Mac Single-Family Seller/Servicer Guide 8503.2 — Applying and Servicing Servicemembers Civil Relief Act (SCRA)-capped Mortgages

This section contains requirements related to: ■ Applying SCRA provisions ■ Calculation of new monthly payment for SCRA-capped Mortgages ■ Application of payments on SCRA-capped Mortgages ■ Accounting reports for SCRA-capped Mortgages ■ Rate changes on SCRA-capped ARMs ■ Servicing compensation for SCRA-capped Mortgages ■ Retroactive rate cap for SCRA-capped Mortgages

(a) Applying SCRA provisions (i) Interest rate cap If the Servicemember and the Mortgage qualify for the SCRA’s maximum interest rate protection and the Servicemember has submitted a written request for protection in accordance with the SCRA, Freddie Mac will: ■ For a Servicemember who is a member of a reserve component, begin applying the interest rate cap with the first monthly Mortgage payment due after the Servicemember receives his or her orders ■ For a Servicemember who is a member of the uniformed services as defined by 10 U.S.C. 101(a)(5) or a Servicemember who belongs to the National Guard, begin applying the interest rate cap with the first monthly Mortgage payment due after the reporting date or effective date of the Servicemember’s Period of Military Service ■ Reinstate the Mortgage to its contractual rate of interest beginning with the second monthly Mortgage payment due one year after the date the Servicemember’s Period of Military Service terminates If the Borrower is delinquent on his or her monthly payments, the Servicer must contact Freddie Mac (see Directory 5) via Form 105, Multipurpose Loan Servicing Transmittal, no later than five Business Days after receiving the request for interest rate relief. For reinstatement purposes, the contractual rate of interest is defined as follows: ■ For a fixed-rate Mortgage, the same rate that was in effect before the reporting date or effective date of Military Service, or the date the Servicemember received orders (for members of a reserve component) ■ For an ARM, the rate to be determined or calculated based on the last interest rate that would have been in effect, or the last payment adjustment that otherwise would have taken place, during the rate cap period If the interest rate cap request is made by the Servicemember in accordance with the SCRA notice provisions and it is received by the Servicer no later than 180 days after the Period of Military Service terminates, the Servicer must apply the interest rate cap retroactively to the first monthly Mortgage payment due after the reporting date, effective date of Military Service or date the Servicemember received orders (for members of a reserve component). However, Freddie Mac will bear the interest loss only from the first monthly Mortgage payment due after the Funding Date. (ii) Written notice to Servicemember, Freddie Mac Within 15 Business Days of receiving an interest rate cap request on a Mortgage that meets the requirements of the SCRA, the Servicer must provide written notice of approval to the Servicemember or the Servicemember’s representative, as applicable. Freddie Mac does not prescribe a particular form of notice. The notice must contain the following at a minimum: 1. The amount of the monthly installment of principal and interest calculated at the rate of 6% per year 2. The amount of the monthly installment of Escrow, if any, which remains unchanged unless insurance coverage, property tax rates or other assessments are modified 3. The total amount and first Due Date of the new monthly Mortgage payment 4. The reinstatement of the monthly Mortgage payment to its contractual rate of interest beginning with the second monthly payment due following the date that is one year after the Servicemember is released from Military Service 5. If known at the time, the scheduled date the Servicemember will be released from Military Service and the Due Date of the first monthly payment at the reinstated contractual rate of interest Within 30 Business Days of receiving the request, the Servicer must: 1. Retain a copy of military orders* evidencing the Servicemember’s military status and start and end dates of his or her Period of Military Service and all other related documentation in the Mortgage file and make it available to Freddie Mac upon request 2. Send a CSV file (see Exhibit 71, CSV File Format to Report Loans Eligible for the SCRA Interest Rate Subsidy) to Freddie Mac (see Directory 3) documenting the start and end dates of the Servicemember’s Period of Military Service *References to “military orders” in the Guide include the alternative documentation outlined in Section 8503.1(b) that Servicers may accept in lieu of official military orders. Once the Servicer has received a request from the Borrower (or the Borrower’s authorized representative) and a copy of his or her military orders, the Servicer must implement the interest rate cap. While the rate cap is in effect, the Servicer must report and remit on the Mortgage in accordance with Section 8106.1 and Chapter 8503. (iii) Assessing a Servicemember’s ability to pay at the Note Rate Unless there are unusual circumstances, Freddie Mac does not require the Servicer to assess the material effect of Military Service on a Borrower’s ability to continue making payments on the Mortgage at the contractual rate of interest. The Servicer must implement the 6% rate cap, upon request of a Borrower, provided that the Borrower meets the requirements of the SCRA. If the Servicer becomes aware of unusual circumstances that give it reason to believe the Servicemember’s ability to pay at the contractual rate of interest is not materially affected by a call to Military Service, then the Servicer must notify its investor reporting specialist (see Directory 3) that Freddie Mac may wish to investigate the Servicemember’s financial circumstances. The Servicer must include any facts to support its supposition and copies of the following: ■ The military orders evidencing the Servicemember’s call to Military Service ■ Form 65, Uniform Residential Loan Application ■ The Note Freddie Mac may determine that a Servicemember’s request for the interest rate cap should be challenged. If so, Freddie Mac will provide the Servicer with instructions on how to proceed. Freddie Mac may decline to implement an interest rate cap if the rate cap was improperly granted to a Servicemember or if the Mortgage did not qualify for SCRA protection (for example, the Servicemember was already in a Period of Military Service at the time the Mortgage was originated). If Freddie Mac informs the Servicer that Freddie Mac declines the request, then within five Business Days, the Servicer must advise the Servicemember or the Servicemember’s representative in writing, citing the specific reasons the Mortgage does not qualify for the interest rate cap and offer to consider other forms of assistance. If further guidance is required, the Servicer may contact its investor reporting specialist (see Directory 3). (iv) Status updates, reinstatements While the interest rate cap is in effect, the Servicer must periodically, but no less than every three months, verify that the Servicemember is still in a Period of Military Service or that no changes have been made to the duration/term of the Period of Military Service that may affect the Servicemember’s eligibility to receive relief. If the Servicemember informs the Servicer, or if the Servicer learns by other means, that the Servicemember’s Period of Military Service has ended, the Servicer must send a written notice to the Servicemember at least 30 days before the reinstatement of the contractual interest rate indicating that the interest rate cap has been terminated and the monthly Mortgage payment has been reinstated to its contractual rate of interest. The written notice of reinstatement of the Mortgage should advise the Servicemember of the following: ■ The amount of the monthly Mortgage payment when reinstated to its contractual rate of interest, specifying such interest rate ■ The date the reinstated monthly payment amount is first due ■ That he or she must furnish a copy of military orders showing any extension of the Period of Military Service beyond the originally scheduled release date, if applicable ■ That he or she must furnish a copy of DD Form 214 to document his or her release from a Period of Military Service The Servicer must follow the pertinent instructions in the table below: Servicer responsibilities for interest rate reinstatement after military service If: Then the Servicer must: The military orders submitted with the interest rate cap request state the end date of the Period of Military Service ■ 30 days prior to the release date, query the Defense Manpower Data Center website (https://www.dmdc.osd.mil/appj/dwp/index.jsp) to determine if there has been a change to the duration/term of the Period of Military Service ■ If the duration/term of the Period of Military Service has not changed, send the Servicemember or his or her representative a written notice that the Servicer will reinstate the monthly Mortgage payment to its contractual rate of interest, including the effective date of the payment change (which is the second monthly payment due following the date that is one year after the Servicemember’s release date), 30 days before the end of the period for which the interest rate is capped at 6% The Period of Military Service has been extended based on notice from the Servicemember, his or her representative, or a certificate obtained from the Defense Manpower Data Center Within 10 Business Days of learning of the extension, notify the Servicer’s investor reporting specialist via CSV file (see Exhibit 71) that the end date of the Servicemember’s Period of Military Service has changed. Retain a copy of the of military orders evidencing the Servicemember’s military status and Period of Military Service and all other related documentation in the Mortgage file and make it available to Freddie Mac upon request. Servicer responsibilities for interest rate reinstatement after military service If: Then the Servicer must: No evidence of extension of the Period of Military Service has been provided by the Servicemember or his or her representative within 30 days of the scheduled release date and a query of the Defense Manpower Data Center website does not indicate a change to the duration/term of the Period of Military Service Take the following steps: ■ Send the Servicemember or his or her representative a written notice that the Servicer will reinstate the monthly Mortgage payment to its contractual rate of interest, including the effective date of the payment change (which is the second monthly payment due following the date that is one year after the Servicemember’s release date), and request documentation of the Servicemember’s release from Military Service (for example, DD Form 214) ■ Reinstate the monthly Mortgage payment to its contractual rate of interest beginning with the second monthly payment due following the date that is one year after the Servicemember’s release date Servicer responsibilities for interest rate reinstatement after military service If: Then the Servicer must: If, as a result of the Servicer’s notification, the Servicemember notifies the Servicer that his or her Period of Military Service has been extended and provides the Servicer with copies of military orders evidencing such extension or a query of the Defense Manpower Data Center website reveals a change to the duration/term of the Period of Military Service, then the Servicer must notify its investor reporting specialist via CSV file (see Exhibit 71) that the end date of the Servicemember’s Period of Military Service has changed within 10 Business Days of receiving the notification from the Servicemember and the Servicer must notify the Servicemember of the new date the Mortgage will reinstate to its contractual interest rate at least 30 days before the reinstatement of the interest rate occurs. Retain a copy of the of military orders evidencing the Servicemember’s military status and Period of Military Service and all other related documentation in the Mortgage file and make it available to Freddie Mac upon request. Servicer responsibilities for interest rate reinstatement after military service If: Then the Servicer must: The Servicemember’s Period of Military Service has ended and a query of the Defense Manpower Data Center Website does not indicate a change to the duration/term of the Period of Military Service Take the following steps: ■ Reinstate the monthly Mortgage payment to its contractual rate of interest beginning with the second monthly payment due following the date that is one year after the Period of Military Service ended ■ Send the Servicemember or his or her representative written notice of the date the Mortgage will reinstate to its contractual interest rate at least 30 days before the reinstatement of the interest rate occurs ■ Remove the Mortgage from the Servicer’s monthly (or quarterly) Interest Rate Differential text file (see Exhibit 72, Text File Format to Request SCRA Interest Rate Differential) the second month following the date that is one year after the Period of Military Service ended (v) Foreclosure relief The Servicer must not foreclose or initiate foreclosure proceedings against a Borrower who is a Servicemember except in accordance with the SCRA and State Military Relief Laws. See Sections 8503.1(b) and 8503.1(c) for Freddie Mac-specific foreclosure relief in addition to that provided by the SCRA or State Military Relief Laws. When foreclosure is allowed to proceed and if a mortgage insurance claim is eventually filed, the Servicer must notify the MI that the Mortgage was subject to SCRA or State Military Relief Laws so that: ■ Interest for SCRA-capped payments due, but unpaid by the Servicemember, is claimable at the Note rate, not at the SCRA-capped rate ■ Claimable interest will not be curtailed by the MI for a delay that was caused solely by the Servicer’s compliance with applicable law For further guidance on relief or remedies (other than interest rate cap under the SCRA) involving Servicemembers who are serving or have served a Period of Military Service, the Servicer must consult with their legal counsel or contact Freddie Mac (see Directory 5). (vi) Late charges The Servicer must waive all late charges or penalties resulting from Mortgage payments deferred, restructured or rate-capped under the SCRA or if required by State Military Relief Laws. (vii) Credit reporting The Servicer must report a Servicemember who is receiving the protection of the SCRA or State Military Relief Laws as “paying as agreed” to the credit repositories. The Servicer must fully comply with the SCRA and State Military Relief Laws as they relate to credit reports kept on Servicemembers who exercise their statutory rights to military relief. (viii) Maintaining correspondence and documentation The Servicer must maintain records of all communications with, and copies of all correspondence and documentation to or from, Servicemembers seeking Mortgage relief for hardship caused by Military Service in the Mortgage file. (ix) Transfers of Servicing When a Transfer of Servicing includes Mortgages that have any type of military relief, including Mortgages with interest rates capped under the SCRA or with suspended foreclosures, the Transferor must identify each such Mortgage to the Transferee before transferring the Mortgage files to the Transferee. See Chapter 7101 for more information on Transfers of Servicing. (x) Monthly reporting to Freddie Mac Default action code 32 – “Military Indulgence”: Servicers should use only default action code 32 to report default processes that are delayed due to the Borrower being in a Period of Military Service and covered under the SCRA or foreclosure relief provided to Servicemembers and their Dependents in accordance with Section 8503.1(b). When utilizing default action code 32, Servicers must provide the date default processes were suspended and continue to report each month that the Servicemember is receiving foreclosure protection under the SCRA or Section 8503.1(b). Default reason code 14 – “Military Service”: When reporting Mortgage relief, loan modifications, or liquidation options extended to Servicemembers, Servicers must report the default action code associated with the specific relief, modification, or liquidation option. Servicers must also report the default reason code 14 to indicate the hardship was caused by military service. Note: For additional information about EDR, refer to Section 9102.6.

(b) Calculation of new monthly payment for SCRA-capped Mortgages If the interest rate on a Mortgage is capped in accordance with Section 8503.2(a), the Servicer may choose between the following two methods for calculating the new monthly payment amount: ■ Reamortization of the Mortgage based on the interest rate of 6%, or ■ Implementation of the 6% rate using the original amortization schedule (i) Revised interest rate, reamortized Mortgage This method applies in calculating the principal and interest (P&I) payment amount both at: ■ The interest rate of 6% ■ The reinstated contractual rate of interest The Servicer must use the following formula: a x (b/12) P&I = ------------------- 1 - (1 + b/12)-c a = Mortgage UPB 1. For 6% rate: scheduled UPB after application of the last payment made before the Due Date of the first payment at 6% 2. For reinstatement to contractual rate: scheduled UPB after application of the last payment made before the Due Date of the second payment due one year after the Servicemember’s Period of Military Service ends b = interest rate 1. Rate applicable to the rate cap period: 6% 2. Rate applicable when reinstated to contractual rate: for fixed-rate Mortgages, use the original Note rate; for ARMs, use the current applicable index plus margin c = actual number of remaining payments, using a calculated term to maturity (ii) 6% rate cap, original amortization schedule Under this method, the Servicer must calculate the Borrower’s monthly P&I at 6% as follows: d + e = monthly P&I d = scheduled principal as calculated per amortization schedule in effect before rate cap e = accrued interest = current cycle Ending UPB x (.06/12) Upon reinstatement to the contractual rate of interest, the P&I amount will correspond to the amortization schedule in effect before the rate cap.

(c) Application of payments on SCRA-capped Mortgages Monthly payments made by Servicemembers on SCRA-capped Mortgages must be applied in accordance with Section 8103.3(a).

(d) Accounting reports for SCRA-capped Mortgages The Servicer must report each SCRA-capped Mortgage in accordance with Section 8303.2(d)(i). Net yield interest due must be calculated based on the current Accounting Net Yield (ANY) rate. The Servicer will receive credit for the interest rate differential, which is defined as follows: ■ Interest rate differential = ANY less adjusted interest rate ■ Adjusted interest rate or Mortgage with Note Rate higher than net yield = 6% less Servicing fee paid to the Servicer Each month the Servicer must: 1. Continue to report the contractual principal and interest payment in the monthly loanlevel transaction for each Mortgage subject to the SCRA interest rate reduction 2. Deposit the full contractual monthly payment of each Mortgage subject to the SCRA interest rate reduction into the Servicer’s Freddie Mac Custodial Account 3. Calculate the interest rate differential reimbursement due to the Servicer for the interest rate differential on each SCRA-capped Mortgage To effectively manage Mortgages that are eligible for the SCRA interest rate cap, Servicers should take the following steps: 1. Notify Freddie Mac via CSV file (see Exhibit 71, CSV File Format to Report Loans Eligible for the SCRA Interest Rate Subsidy) of each new Mortgage that becomes eligible for the SCRA interest rate cap 2. Request reimbursement of the interest rate differential on a monthly (or quarterly) basis via text file. (See Exhibit 72, Text File Format to Request SCRA Interest Rate Differential.) 3. Remove the loan from the text file (see Exhibit 72) and revert the Mortgage to the normal contractual interest rate 12 months after the end date of the Servicemember’s Period of Military Service Adjustments to each SCRA-capped Mortgage for the previous month must be reported via text file (see Exhibit 72) to Freddie Mac (see Directory 3) monthly, or if the Servicer chooses on a quarterly basis, not later than the third Business Day before the end of the month. Freddie Mac will enter the total credit in the “Adjustment Line” of the Monthly Account Statement (MAS) and will apply the credit against the amount Freddie Mac drafts for that Accounting Cycle and make the appropriate adjustment to the Principal and Interest Custodial Account. If, prior to the end of the month, an SCRA-capped Mortgage pays off or is involved in a Transfer of Servicing, or if the Servicemember’s Period of Military Service ends, the Servicer must complete a separate text file (see Exhibit 72) for the affected Mortgage and submit it to Freddie Mac (see Directory 3) within five Business Days. If the Servicer disagrees with the interest credit Freddie Mac gives the Servicer, the Servicer must notify Freddie Mac (see Directory 3) in writing within 30 days of the date of the MAS. The notification must state: 1. The Seller/Servicer number 2. The applicable Freddie Mac loan number(s) 3. A brief description of the problem 4. The unpaid balance for any disputed credit 5. Military orders* supporting the relief period requested *References to “military orders” in the Guide include the alternative documentation outlined in Section 8503.1(b) that Servicers may accept in lieu of official military orders. The Internal Revenue Service (IRS) Form 1098, Mortgage Interest Statement, that the Servicer files in accordance with Section 8106.2(a) should reflect the reduced interest amount paid by the Borrower during the rate cap period.

(e) Rate changes on SCRA-capped ARMs Freddie Mac notifies the Servicer of ANY changes on ARMs in accordance with Section 8502.2. When monthly net yield interest is reported on the Loan-Level Transaction for an SCRA-capped adjustable Mortgage, the Servicer must calculate the interest based on the new net yield shown in Freddie Mac’s Notification of ARMs Group Net Yield Adjustment. Freddie Mac will calculate the interest credit due to the Servicer in accordance with Section 8503.2(d).

(f) Servicing compensation for SCRA-capped Mortgages The Servicer’s compensation for Servicing an SCRA-capped Mortgage will be based on a Servicing Spread that remains at the rate in effect before the first month to which the rate cap applies.

(g) Retroactive rate cap for SCRA-capped Mortgages Retroactive application of the SCRA rate cap under Section 8503.2(a) must be processed as follows: (i) Reimbursement to the Servicemember The Servicer must calculate the difference between the amount of interest paid by the Servicemember at the contractual rate of interest and the amount of interest due at 6%, for the applicable benefit period. At the Servicemember’s option, the resulting amount may be credited to the UPB of the Mortgage or to reduce monthly Escrow installments, or refunded to the Servicemember. (ii) Reimbursement to the Servicer The Servicer must calculate the credit that results from the retroactive interest rate differential and notify Freddie Mac (see Directory 3) of the amount of the credit the Servicer is claiming (see Section 8503.2(d)). Freddie Mac will validate the credit amount the Servicer requests and enters it on the “Adjustment Line” of the Servicer’s MAS.

Relief Act (SCRA)-capped Mortgages (Future effective date 11/16/26) Refer to Bulletins 2026-G and 2026-11, which announced updates related to Freddie Mac’s new event-based default related reporting requirements. Beginning November 16, 2026, Servicers may implement the new requirements if they are operationally ready to do so. If a Servicer adopts the new event-based default related reporting standards before the mandatory effective date of September 27, 2027, it must comply with the associated Guide requirements that will be effective on September 27, 2027 and, upon such adoption, must discontinue monthly EDR reporting. This section contains requirements related to: ■ Applying SCRA provisions ■ Calculation of new monthly payment for SCRA-capped Mortgages ■ Application of payments on SCRA-capped Mortgages ■ Accounting reports for SCRA-capped Mortgages ■ Rate changes on SCRA-capped ARMs ■ Servicing compensation for SCRA-capped Mortgages ■ Retroactive rate cap for SCRA-capped Mortgages

(a) Applying SCRA provisions (i) Interest rate cap If the Servicemember and the Mortgage qualify for the SCRA’s maximum interest rate protection and the Servicemember has submitted a written request for protection in accordance with the SCRA, Freddie Mac will: ■ For a Servicemember who is a member of a reserve component, begin applying the interest rate cap with the first monthly Mortgage payment due after the Servicemember receives his or her orders ■ For a Servicemember who is a member of the uniformed services as defined by 10 U.S.C. 101(a)(5) or a Servicemember who belongs to the National Guard, begin applying the interest rate cap with the first monthly Mortgage payment due after the reporting date or effective date of the Servicemember’s Period of Military Service ■ Reinstate the Mortgage to its contractual rate of interest beginning with the second monthly Mortgage payment due one year after the date the Servicemember’s Period of Military Service terminates If the Borrower is delinquent on his or her monthly payments, the Servicer must contact Freddie Mac (see Directory 5) via Form 105, Multipurpose Loan Servicing Transmittal, no later than five Business Days after receiving the request for interest rate relief. For reinstatement purposes, the contractual rate of interest is defined as follows: ■ For a fixed-rate Mortgage, the same rate that was in effect before the reporting date or effective date of Military Service, or the date the Servicemember received orders (for members of a reserve component) ■ For an ARM, the rate to be determined or calculated based on the last interest rate that would have been in effect, or the last payment adjustment that otherwise would have taken place, during the rate cap period If the interest rate cap request is made by the Servicemember in accordance with the SCRA notice provisions and it is received by the Servicer no later than 180 days after the Period of Military Service terminates, the Servicer must apply the interest rate cap retroactively to the first monthly Mortgage payment due after the reporting date, effective date of Military Service or date the Servicemember received orders (for members of a reserve component). However, Freddie Mac will bear the interest loss only from the first monthly Mortgage payment due after the Funding Date. (ii) Written notice to Servicemember, Freddie Mac Within 15 Business Days of receiving an interest rate cap request on a Mortgage that meets the requirements of the SCRA, the Servicer must provide written notice of approval to the Servicemember or the Servicemember’s representative, as applicable. Freddie Mac does not prescribe a particular form of notice. The notice must contain the following at a minimum: 1. The amount of the monthly installment of principal and interest calculated at the rate of 6% per year 2. The amount of the monthly installment of Escrow, if any, which remains unchanged unless insurance coverage, property tax rates or other assessments are modified 3. The total amount and first Due Date of the new monthly Mortgage payment 4. The reinstatement of the monthly Mortgage payment to its contractual rate of interest beginning with the second monthly payment due following the date that is one year after the Servicemember is released from Military Service 5. If known at the time, the scheduled date the Servicemember will be released from Military Service and the Due Date of the first monthly payment at the reinstated contractual rate of interest Within 30 Business Days of receiving the request, the Servicer must: 1. Retain a copy of military orders* evidencing the Servicemember’s military status and start and end dates of his or her Period of Military Service and all other related documentation in the Mortgage file and make it available to Freddie Mac upon request 2. Send a CSV file (see Exhibit 71, CSV File Format to Report Loans Eligible for the SCRA Interest Rate Subsidy) to Freddie Mac (see Directory 3) documenting the start and end dates of the Servicemember’s Period of Military Service *References to “military orders” in the Guide include the alternative documentation outlined in Section 8503.1(b) that Servicers may accept in lieu of official military orders. Once the Servicer has received a request from the Borrower (or the Borrower’s authorized representative) and a copy of his or her military orders, the Servicer must implement the interest rate cap. While the rate cap is in effect, the Servicer must report and remit on the Mortgage in accordance with Section 8106.1 and Chapter 8503. (iii) Assessing a Servicemember’s ability to pay at the Note Rate Unless there are unusual circumstances, Freddie Mac does not require the Servicer to assess the material effect of Military Service on a Borrower’s ability to continue making payments on the Mortgage at the contractual rate of interest. The Servicer must implement the 6% rate cap, upon request of a Borrower, provided that the Borrower meets the requirements of the SCRA. If the Servicer becomes aware of unusual circumstances that give it reason to believe the Servicemember’s ability to pay at the contractual rate of interest is not materially affected by a call to Military Service, then the Servicer must notify its investor reporting specialist (see Directory 3) that Freddie Mac may wish to investigate the Servicemember’s financial circumstances. The Servicer must include any facts to support its supposition and copies of the following: ■ The military orders evidencing the Servicemember’s call to Military Service ■ Form 65, Uniform Residential Loan Application ■ The Note Freddie Mac may determine that a Servicemember’s request for the interest rate cap should be challenged. If so, Freddie Mac will provide the Servicer with instructions on how to proceed. Freddie Mac may decline to implement an interest rate cap if the rate cap was improperly granted to a Servicemember or if the Mortgage did not qualify for SCRA protection (for example, the Servicemember was already in a Period of Military Service at the time the Mortgage was originated). If Freddie Mac informs the Servicer that Freddie Mac declines the request, then within five Business Days, the Servicer must advise the Servicemember or the Servicemember’s representative in writing, citing the specific reasons the Mortgage does not qualify for the interest rate cap and offer to consider other forms of assistance. If further guidance is required, the Servicer may contact its investor reporting specialist (see Directory 3). (iv) Status updates, reinstatements While the interest rate cap is in effect, the Servicer must periodically, but no less than every three months, verify that the Servicemember is still in a Period of Military Service or that no changes have been made to the duration/term of the Period of Military Service that may affect the Servicemember’s eligibility to receive relief. If the Servicemember informs the Servicer, or if the Servicer learns by other means, that the Servicemember’s Period of Military Service has ended, the Servicer must send a written notice to the Servicemember at least 30 days before the reinstatement of the contractual interest rate indicating that the interest rate cap has been terminated and the monthly Mortgage payment has been reinstated to its contractual rate of interest. The written notice of reinstatement of the Mortgage should advise the Servicemember of the following: ■ The amount of the monthly Mortgage payment when reinstated to its contractual rate of interest, specifying such interest rate ■ The date the reinstated monthly payment amount is first due ■ That he or she must furnish a copy of military orders showing any extension of the Period of Military Service beyond the originally scheduled release date, if applicable ■ That he or she must furnish a copy of DD Form 214 to document his or her release from a Period of Military Service The Servicer must follow the pertinent instructions in the table below: Servicer responsibilities for interest rate reinstatement after military service If: Then the Servicer must: The military orders submitted with the interest rate cap request state the end date of the Period of Military Service ■ 30 days prior to the release date, query the Defense Manpower Data Center website (https://www.dmdc.osd.mil/appj/dwp/index.jsp) to determine if there has been a change to the duration/term of the Period of Military Service ■ If the duration/term of the Period of Military Service has not changed, send the Servicemember or his or her representative a written notice that the Servicer will reinstate the monthly Mortgage payment to its contractual rate of interest, including the effective date of the payment change (which is the second monthly payment due following the date that is one year after the Servicemember’s release date), 30 days before the end of the period for which the interest rate is capped at 6% The Period of Military Service has been extended based on notice from the Servicemember, his or her representative, or a certificate obtained from the Defense Manpower Data Center Within 10 Business Days of learning of the extension, notify the Servicer’s investor reporting specialist via CSV file (see Exhibit 71) that the end date of the Servicemember’s Period of Military Service has changed. Retain a copy of the of military orders evidencing the Servicemember’s military status and Period of Military Service and all other related documentation in the Mortgage file and make it available to Freddie Mac upon request. Servicer responsibilities for interest rate reinstatement after military service If: Then the Servicer must: No evidence of extension of the Period of Military Service has been provided by the Servicemember or his or her representative within 30 days of the scheduled release date and a query of the Defense Manpower Data Center website does not indicate a change to the duration/term of the Period of Military Service Take the following steps: ■ Send the Servicemember or his or her representative a written notice that the Servicer will reinstate the monthly Mortgage payment to its contractual rate of interest, including the effective date of the payment change (which is the second monthly payment due following the date that is one year after the Servicemember’s release date), and request documentation of the Servicemember’s release from Military Service (for example, DD Form 214) ■ Reinstate the monthly Mortgage payment to its contractual rate of interest beginning with the second monthly payment due following the date that is one year after the Servicemember’s release date Servicer responsibilities for interest rate reinstatement after military service If: Then the Servicer must: If, as a result of the Servicer’s notification, the Servicemember notifies the Servicer that his or her Period of Military Service has been extended and provides the Servicer with copies of military orders evidencing such extension or a query of the Defense Manpower Data Center website reveals a change to the duration/term of the Period of Military Service, then the Servicer must notify its investor reporting specialist via CSV file (see Exhibit 71) that the end date of the Servicemember’s Period of Military Service has changed within 10 Business Days of receiving the notification from the Servicemember and the Servicer must notify the Servicemember of the new date the Mortgage will reinstate to its contractual interest rate at least 30 days before the reinstatement of the interest rate occurs. Retain a copy of the of military orders evidencing the Servicemember’s military status and Period of Military Service and all other related documentation in the Mortgage file and make it available to Freddie Mac upon request. Servicer responsibilities for interest rate reinstatement after military service If: Then the Servicer must: The Servicemember’s Period of Military Service has ended and a query of the Defense Manpower Data Center Website does not indicate a change to the duration/term of the Period of Military Service Take the following steps: ■ Reinstate the monthly Mortgage payment to its contractual rate of interest beginning with the second monthly payment due following the date that is one year after the Period of Military Service ended ■ Send the Servicemember or his or her representative written notice of the date the Mortgage will reinstate to its contractual interest rate at least 30 days before the reinstatement of the interest rate occurs ■ Remove the Mortgage from the Servicer’s monthly (or quarterly) Interest Rate Differential text file (see Exhibit 72, Text File Format to Request SCRA Interest Rate Differential) the second month following the date that is one year after the Period of Military Service ended (v) Foreclosure relief The Servicer must not foreclose or initiate foreclosure proceedings against a Borrower who is a Servicemember except in accordance with the SCRA and State Military Relief Laws. See Sections 8503.1(b) and 8503.1(c) for Freddie Mac-specific foreclosure relief in addition to that provided by the SCRA or State Military Relief Laws. When foreclosure is allowed to proceed and if a mortgage insurance claim is eventually filed, the Servicer must notify the MI that the Mortgage was subject to SCRA or State Military Relief Laws so that: ■ Interest for SCRA-capped payments due, but unpaid by the Servicemember, is claimable at the Note rate, not at the SCRA-capped rate ■ Claimable interest will not be curtailed by the MI for a delay that was caused solely by the Servicer’s compliance with applicable law For further guidance on relief or remedies (other than interest rate cap under the SCRA) involving Servicemembers who are serving or have served a Period of Military Service, the Servicer must consult with their legal counsel or contact Freddie Mac (see Directory 5). (vi) Late charges The Servicer must waive all late charges or penalties resulting from Mortgage payments deferred, restructured or rate-capped under the SCRA or if required by State Military Relief Laws. (vii) Credit reporting The Servicer must report a Servicemember who is receiving the protection of the SCRA or State Military Relief Laws as “paying as agreed” to the credit repositories. The Servicer must fully comply with the SCRA and State Military Relief Laws as they relate to credit reports kept on Servicemembers who exercise their statutory rights to military relief. (viii) Maintaining correspondence and documentation The Servicer must maintain records of all communications with, and copies of all correspondence and documentation to or from, Servicemembers seeking Mortgage relief for hardship caused by Military Service in the Mortgage file. (ix) Transfers of Servicing When a Transfer of Servicing includes Mortgages that have any type of military relief, including Mortgages with interest rates capped under the SCRA or with suspended foreclosures, the Transferor must identify each such Mortgage to the Transferee before transferring the Mortgage files to the Transferee. See Chapter 7101 for more information on Transfers of Servicing. (x) Monthly reporting to Freddie Mac Default action code 32 – “Military Indulgence”: Servicers should use only default action code 32 to report default processes that are delayed due to the Borrower being in a Period of Military Service and covered under the SCRA or foreclosure relief provided to Servicemembers and their Dependents in accordance with Section 8503.1(b). When utilizing default action code 32, Servicers must provide the date default processes were suspended and continue to report each month that the Servicemember is receiving foreclosure protection under the SCRA or Section 8503.1(b). Default reason code 14 – “Military Service”: When reporting Mortgage relief, loan modifications, or liquidation options extended to Servicemembers, Servicers must report the default action code associated with the specific relief, modification, or liquidation option. Servicers must also report the default reason code 14 to indicate the hardship was caused by military service. Note: For additional information about EDR, refer to Section 9102.6.

(b) Calculation of new monthly payment for SCRA-capped Mortgages If the interest rate on a Mortgage is capped in accordance with Section 8503.2(a), the Servicer may choose between the following two methods for calculating the new monthly payment amount: ■ Reamortization of the Mortgage based on the interest rate of 6%, or ■ Implementation of the 6% rate using the original amortization schedule (i) Revised interest rate, reamortized Mortgage This method applies in calculating the principal and interest (P&I) payment amount both at: ■ The interest rate of 6% ■ The reinstated contractual rate of interest The Servicer must use the following formula: a x (b/12) P&I = ------------------- 1 - (1 + b/12)-c a = Mortgage UPB 1. For 6% rate: scheduled UPB after application of the last payment made before the Due Date of the first payment at 6% 2. For reinstatement to contractual rate: scheduled UPB after application of the last payment made before the Due Date of the second payment due one year after the Servicemember’s Period of Military Service ends b = interest rate 1. Rate applicable to the rate cap period: 6% 2. Rate applicable when reinstated to contractual rate: for fixed-rate Mortgages, use the original Note rate; for ARMs, use the current applicable index plus margin c = actual number of remaining payments, using a calculated term to maturity (ii) 6% rate cap, original amortization schedule Under this method, the Servicer must calculate the Borrower’s monthly P&I at 6% as follows: d + e = monthly P&I d = scheduled principal as calculated per amortization schedule in effect before rate cap e = accrued interest = current cycle Ending UPB x (.06/12) Upon reinstatement to the contractual rate of interest, the P&I amount will correspond to the amortization schedule in effect before the rate cap.

(c) Application of payments on SCRA-capped Mortgages Monthly payments made by Servicemembers on SCRA-capped Mortgages must be applied in accordance with Section 8103.3(a).

(d) Accounting reports for SCRA-capped Mortgages The Servicer must report each SCRA-capped Mortgage in accordance with Section 8303.2(d)(i). Net yield interest due must be calculated based on the current Accounting Net Yield (ANY) rate. The Servicer will receive credit for the interest rate differential, which is defined as follows: ■ Interest rate differential = ANY less adjusted interest rate ■ Adjusted interest rate or Mortgage with Note Rate higher than net yield = 6% less Servicing fee paid to the Servicer Each month the Servicer must: 1. Continue to report the contractual principal and interest payment in the monthly loanlevel transaction for each Mortgage subject to the SCRA interest rate reduction 2. Deposit the full contractual monthly payment of each Mortgage subject to the SCRA interest rate reduction into the Servicer’s Freddie Mac Custodial Account 3. Calculate the interest rate differential reimbursement due to the Servicer for the interest rate differential on each SCRA-capped Mortgage To effectively manage Mortgages that are eligible for the SCRA interest rate cap, Servicers should take the following steps: 1. Notify Freddie Mac via CSV file (see Exhibit 71, CSV File Format to Report Loans Eligible for the SCRA Interest Rate Subsidy) of each new Mortgage that becomes eligible for the SCRA interest rate cap 2. Request reimbursement of the interest rate differential on a monthly (or quarterly) basis via text file. (See Exhibit 72, Text File Format to Request SCRA Interest Rate Differential.) 3. Remove the loan from the text file (see Exhibit 72) and revert the Mortgage to the normal contractual interest rate 12 months after the end date of the Servicemember’s Period of Military Service Adjustments to each SCRA-capped Mortgage for the previous month must be reported via text file (see Exhibit 72) to Freddie Mac (see Directory 3) monthly, or if the Servicer chooses on a quarterly basis, not later than the third Business Day before the end of the month. Freddie Mac will enter the total credit in the “Adjustment Line” of the Monthly Account Statement (MAS) and will apply the credit against the amount Freddie Mac drafts for that Accounting Cycle and make the appropriate adjustment to the Principal and Interest Custodial Account. If, prior to the end of the month, an SCRA-capped Mortgage pays off or is involved in a Transfer of Servicing, or if the Servicemember’s Period of Military Service ends, the Servicer must complete a separate text file (see Exhibit 72) for the affected Mortgage and submit it to Freddie Mac (see Directory 3) within five Business Days. If the Servicer disagrees with the interest credit Freddie Mac gives the Servicer, the Servicer must notify Freddie Mac (see Directory 3) in writing within 30 days of the date of the MAS. The notification must state: 1. The Seller/Servicer number 2. The applicable Freddie Mac loan number(s) 3. A brief description of the problem 4. The unpaid balance for any disputed credit 5. Military orders* supporting the relief period requested *References to “military orders” in the Guide include the alternative documentation outlined in Section 8503.1(b) that Servicers may accept in lieu of official military orders. The Internal Revenue Service (IRS) Form 1098, Mortgage Interest Statement, that the Servicer files in accordance with Section 8106.2(a) should reflect the reduced interest amount paid by the Borrower during the rate cap period.

(e) Rate changes on SCRA-capped ARMs Freddie Mac notifies the Servicer of ANY changes on ARMs in accordance with Section 8502.2. When monthly net yield interest is reported on the Loan-Level Transaction for an SCRA-capped adjustable Mortgage, the Servicer must calculate the interest based on the new net yield shown in Freddie Mac’s Notification of ARMs Group Net Yield Adjustment. Freddie Mac will calculate the interest credit due to the Servicer in accordance with Section 8503.2(d).

(f) Servicing compensation for SCRA-capped Mortgages The Servicer’s compensation for Servicing an SCRA-capped Mortgage will be based on a Servicing Spread that remains at the rate in effect before the first month to which the rate cap applies.

(g) Retroactive rate cap for SCRA-capped Mortgages Retroactive application of the SCRA rate cap under Section 8503.2(a) must be processed as follows: (i) Reimbursement to the Servicemember The Servicer must calculate the difference between the amount of interest paid by the Servicemember at the contractual rate of interest and the amount of interest due at 6%, for the applicable benefit period. At the Servicemember’s option, the resulting amount may be credited to the UPB of the Mortgage or to reduce monthly Escrow installments, or refunded to the Servicemember. (ii) Reimbursement to the Servicer The Servicer must calculate the credit that results from the retroactive interest rate differential and notify Freddie Mac (see Directory 3) of the amount of the credit the Servicer is claiming (see Section 8503.2(d)). Freddie Mac will validate the credit amount the Servicer requests and enters it on the “Adjustment Line” of the Servicer’s MAS.

Relief Act (SCRA)-capped Mortgages (Future effective date 09/27/27) This section contains requirements related to: ■ Applying SCRA provisions ■ Calculation of new monthly payment for SCRA-capped Mortgages ■ Application of payments on SCRA-capped Mortgages ■ Accounting reports for SCRA-capped Mortgages ■ Rate changes on SCRA-capped ARMs ■ Servicing compensation for SCRA-capped Mortgages ■ Retroactive rate cap for SCRA-capped Mortgages

(a) Applying SCRA provisions (i) Interest rate cap If the Servicemember and the Mortgage qualify for the SCRA’s maximum interest rate protection and the Servicemember has submitted a written request for protection in accordance with the SCRA, Freddie Mac will: ■ For a Servicemember who is a member of a reserve component, begin applying the interest rate cap with the first monthly Mortgage payment due after the Servicemember receives his or her orders ■ For a Servicemember who is a member of the uniformed services as defined by 10 U.S.C. 101(a)(5) or a Servicemember who belongs to the National Guard, begin applying the interest rate cap with the first monthly Mortgage payment due after the reporting date or effective date of the Servicemember’s Period of Military Service ■ Reinstate the Mortgage to its contractual rate of interest beginning with the second monthly Mortgage payment due one year after the date the Servicemember’s Period of Military Service terminates If the Borrower is delinquent on his or her monthly payments, the Servicer must contact Freddie Mac (see Directory 5) via Form 105, Multipurpose Loan Servicing Transmittal, no later than five Business Days after receiving the request for interest rate relief. For reinstatement purposes, the contractual rate of interest is defined as follows: ■ For a fixed-rate Mortgage, the same rate that was in effect before the reporting date or effective date of Military Service, or the date the Servicemember received orders (for members of a reserve component) ■ For an ARM, the rate to be determined or calculated based on the last interest rate that would have been in effect, or the last payment adjustment that otherwise would have taken place, during the rate cap period If the interest rate cap request is made by the Servicemember in accordance with the SCRA notice provisions and it is received by the Servicer no later than 180 days after the Period of Military Service terminates, the Servicer must apply the interest rate cap retroactively to the first monthly Mortgage payment due after the reporting date, effective date of Military Service or date the Servicemember received orders (for members of a reserve component). However, Freddie Mac will bear the interest loss only from the first monthly Mortgage payment due after the Funding Date. (ii) Written notice to Servicemember, Freddie Mac Within 15 Business Days of receiving an interest rate cap request on a Mortgage that meets the requirements of the SCRA, the Servicer must provide written notice of approval to the Servicemember or the Servicemember’s representative, as applicable. Freddie Mac does not prescribe a particular form of notice. The notice must contain the following at a minimum: 1. The amount of the monthly installment of principal and interest calculated at the rate of 6% per year 2. The amount of the monthly installment of Escrow, if any, which remains unchanged unless insurance coverage, property tax rates or other assessments are modified 3. The total amount and first Due Date of the new monthly Mortgage payment 4. The reinstatement of the monthly Mortgage payment to its contractual rate of interest beginning with the second monthly payment due following the date that is one year after the Servicemember is released from Military Service 5. If known at the time, the scheduled date the Servicemember will be released from Military Service and the Due Date of the first monthly payment at the reinstated contractual rate of interest Within 30 Business Days of receiving the request, the Servicer must: 1. Retain a copy of military orders* evidencing the Servicemember’s military status and start and end dates of his or her Period of Military Service and all other related documentation in the Mortgage file and make it available to Freddie Mac upon request 2. Send a CSV file (see Exhibit 71, CSV File Format to Report Loans Eligible for the SCRA Interest Rate Subsidy) to Freddie Mac (see Directory 3) documenting the start and end dates of the Servicemember’s Period of Military Service *References to “military orders” in the Guide include the alternative documentation outlined in Section 8503.1(b) that Servicers may accept in lieu of official military orders. Once the Servicer has received a request from the Borrower (or the Borrower’s authorized representative) and a copy of his or her military orders, the Servicer must implement the interest rate cap. While the rate cap is in effect, the Servicer must report and remit on the Mortgage in accordance with Section 8106.1 and Chapter 8503. (iii) Assessing a Servicemember’s ability to pay at the Note Rate Unless there are unusual circumstances, Freddie Mac does not require the Servicer to assess the material effect of Military Service on a Borrower’s ability to continue making payments on the Mortgage at the contractual rate of interest. The Servicer must implement the 6% rate cap, upon request of a Borrower, provided that the Borrower meets the requirements of the SCRA. If the Servicer becomes aware of unusual circumstances that give it reason to believe the Servicemember’s ability to pay at the contractual rate of interest is not materially affected by a call to Military Service, then the Servicer must notify its investor reporting specialist (see Directory 3) that Freddie Mac may wish to investigate the Servicemember’s financial circumstances. The Servicer must include any facts to support its supposition and copies of the following: ■ The military orders evidencing the Servicemember’s call to Military Service ■ Form 65, Uniform Residential Loan Application ■ The Note Freddie Mac may determine that a Servicemember’s request for the interest rate cap should be challenged. If so, Freddie Mac will provide the Servicer with instructions on how to proceed. Freddie Mac may decline to implement an interest rate cap if the rate cap was improperly granted to a Servicemember or if the Mortgage did not qualify for SCRA protection (for example, the Servicemember was already in a Period of Military Service at the time the Mortgage was originated). If Freddie Mac informs the Servicer that Freddie Mac declines the request, then within five Business Days, the Servicer must advise the Servicemember or the Servicemember’s representative in writing, citing the specific reasons the Mortgage does not qualify for the interest rate cap and offer to consider other forms of assistance. If further guidance is required, the Servicer may contact its investor reporting specialist (see Directory 3). (iv) Status updates, reinstatements While the interest rate cap is in effect, the Servicer must periodically, but no less than every three months, verify that the Servicemember is still in a Period of Military Service or that no changes have been made to the duration/term of the Period of Military Service that may affect the Servicemember’s eligibility to receive relief. If the Servicemember informs the Servicer, or if the Servicer learns by other means, that the Servicemember’s Period of Military Service has ended, the Servicer must send a written notice to the Servicemember at least 30 days before the reinstatement of the contractual interest rate indicating that the interest rate cap has been terminated and the monthly Mortgage payment has been reinstated to its contractual rate of interest. The written notice of reinstatement of the Mortgage should advise the Servicemember of the following: ■ The amount of the monthly Mortgage payment when reinstated to its contractual rate of interest, specifying such interest rate ■ The date the reinstated monthly payment amount is first due ■ That he or she must furnish a copy of military orders showing any extension of the Period of Military Service beyond the originally scheduled release date, if applicable ■ That he or she must furnish a copy of DD Form 214 to document his or her release from a Period of Military Service The Servicer must follow the pertinent instructions in the table below: Servicer responsibilities for interest rate reinstatement after military service If: Then the Servicer must: The military orders submitted with the interest rate cap request state the end date of the Period of Military Service ■ 30 days prior to the release date, query the Defense Manpower Data Center website (https://www.dmdc.osd.mil/appj/dwp/index.jsp) to determine if there has been a change to the duration/term of the Period of Military Service ■ If the duration/term of the Period of Military Service has not changed, send the Servicemember or his or her representative a written notice that the Servicer will reinstate the monthly Mortgage payment to its contractual rate of interest, including the effective date of the payment change (which is the second monthly payment due following the date that is one year after the Servicemember’s release date), 30 days before the end of the period for which the interest rate is capped at 6% The Period of Military Service has been extended based on notice from the Servicemember, his or her representative, or a certificate obtained from the Defense Manpower Data Center Within 10 Business Days of learning of the extension, notify the Servicer’s investor reporting specialist via CSV file (see Exhibit 71) that the end date of the Servicemember’s Period of Military Service has changed. Retain a copy of the of military orders evidencing the Servicemember’s military status and Period of Military Service and all other related documentation in the Mortgage file and make it available to Freddie Mac upon request. Servicer responsibilities for interest rate reinstatement after military service If: Then the Servicer must: No evidence of extension of the Period of Military Service has been provided by the Servicemember or his or her representative within 30 days of the scheduled release date and a query of the Defense Manpower Data Center website does not indicate a change to the duration/term of the Period of Military Service Take the following steps: ■ Send the Servicemember or his or her representative a written notice that the Servicer will reinstate the monthly Mortgage payment to its contractual rate of interest, including the effective date of the payment change (which is the second monthly payment due following the date that is one year after the Servicemember’s release date), and request documentation of the Servicemember’s release from Military Service (for example, DD Form 214) ■ Reinstate the monthly Mortgage payment to its contractual rate of interest beginning with the second monthly payment due following the date that is one year after the Servicemember’s release date Servicer responsibilities for interest rate reinstatement after military service If: Then the Servicer must: If, as a result of the Servicer’s notification, the Servicemember notifies the Servicer that his or her Period of Military Service has been extended and provides the Servicer with copies of military orders evidencing such extension or a query of the Defense Manpower Data Center website reveals a change to the duration/term of the Period of Military Service, then the Servicer must notify its investor reporting specialist via CSV file (see Exhibit 71) that the end date of the Servicemember’s Period of Military Service has changed within 10 Business Days of receiving the notification from the Servicemember and the Servicer must notify the Servicemember of the new date the Mortgage will reinstate to its contractual interest rate at least 30 days before the reinstatement of the interest rate occurs. Retain a copy of the of military orders evidencing the Servicemember’s military status and Period of Military Service and all other related documentation in the Mortgage file and make it available to Freddie Mac upon request. Servicer responsibilities for interest rate reinstatement after military service If: Then the Servicer must: The Servicemember’s Period of Military Service has ended and a query of the Defense Manpower Data Center Website does not indicate a change to the duration/term of the Period of Military Service Take the following steps: ■ Reinstate the monthly Mortgage payment to its contractual rate of interest beginning with the second monthly payment due following the date that is one year after the Period of Military Service ended ■ Send the Servicemember or his or her representative written notice of the date the Mortgage will reinstate to its contractual interest rate at least 30 days before the reinstatement of the interest rate occurs ■ Remove the Mortgage from the Servicer’s monthly (or quarterly) Interest Rate Differential text file (see Exhibit 72, Text File Format to Request SCRA Interest Rate Differential) the second month following the date that is one year after the Period of Military Service ended (v) Foreclosure relief The Servicer must not foreclose or initiate foreclosure proceedings against a Borrower who is a Servicemember except in accordance with the SCRA and State Military Relief Laws. See Sections 8503.1(b) and 8503.1(c) for Freddie Mac-specific foreclosure relief in addition to that provided by the SCRA or State Military Relief Laws. When foreclosure is allowed to proceed and if a mortgage insurance claim is eventually filed, the Servicer must notify the MI that the Mortgage was subject to SCRA or State Military Relief Laws so that: ■ Interest for SCRA-capped payments due, but unpaid by the Servicemember, is claimable at the Note rate, not at the SCRA-capped rate ■ Claimable interest will not be curtailed by the MI for a delay that was caused solely by the Servicer’s compliance with applicable law For further guidance on relief or remedies (other than interest rate cap under the SCRA) involving Servicemembers who are serving or have served a Period of Military Service, the Servicer must consult with their legal counsel or contact Freddie Mac (see Directory 5). (vi) Late charges The Servicer must waive all late charges or penalties resulting from Mortgage payments deferred, restructured or rate-capped under the SCRA or if required by State Military Relief Laws. (vii) Credit reporting The Servicer must report a Servicemember who is receiving the protection of the SCRA or State Military Relief Laws as “paying as agreed” to the credit repositories. The Servicer must fully comply with the SCRA and State Military Relief Laws as they relate to credit reports kept on Servicemembers who exercise their statutory rights to military relief. (viii) Maintaining correspondence and documentation The Servicer must maintain records of all communications with, and copies of all correspondence and documentation to or from, Servicemembers seeking Mortgage relief for hardship caused by Military Service in the Mortgage file. (ix) Transfers of Servicing When a Transfer of Servicing includes Mortgages that have any type of military relief, including Mortgages with interest rates capped under the SCRA or with suspended foreclosures, the Transferor must identify each such Mortgage to the Transferee before transferring the Mortgage files to the Transferee. See Chapter 7101 for more information on Transfers of Servicing.

(b) Calculation of new monthly payment for SCRA-capped Mortgages If the interest rate on a Mortgage is capped in accordance with Section 8503.2(a), the Servicer may choose between the following two methods for calculating the new monthly payment amount: ■ Reamortization of the Mortgage based on the interest rate of 6%, or ■ Implementation of the 6% rate using the original amortization schedule (i) Revised interest rate, reamortized Mortgage This method applies in calculating the principal and interest (P&I) payment amount both at: ■ The interest rate of 6% ■ The reinstated contractual rate of interest The Servicer must use the following formula: a x (b/12) P&I = ------------------- 1 - (1 + b/12)-c a = Mortgage UPB 1. For 6% rate: scheduled UPB after application of the last payment made before the Due Date of the first payment at 6% 2. For reinstatement to contractual rate: scheduled UPB after application of the last payment made before the Due Date of the second payment due one year after the Servicemember’s Period of Military Service ends b = interest rate 1. Rate applicable to the rate cap period: 6% 2. Rate applicable when reinstated to contractual rate: for fixed-rate Mortgages, use the original Note rate; for ARMs, use the current applicable index plus margin c = actual number of remaining payments, using a calculated term to maturity (ii) 6% rate cap, original amortization schedule Under this method, the Servicer must calculate the Borrower’s monthly P&I at 6% as follows: d + e = monthly P&I d = scheduled principal as calculated per amortization schedule in effect before rate cap e = accrued interest = current cycle Ending UPB x (.06/12) Upon reinstatement to the contractual rate of interest, the P&I amount will correspond to the amortization schedule in effect before the rate cap.

(c) Application of payments on SCRA-capped Mortgages Monthly payments made by Servicemembers on SCRA-capped Mortgages must be applied in accordance with Section 8103.3(a).

(d) Accounting reports for SCRA-capped Mortgages The Servicer must report each SCRA-capped Mortgage in accordance with Section 8303.2(d)(i). Net yield interest due must be calculated based on the current Accounting Net Yield (ANY) rate. The Servicer will receive credit for the interest rate differential, which is defined as follows: ■ Interest rate differential = ANY less adjusted interest rate ■ Adjusted interest rate or Mortgage with Note Rate higher than net yield = 6% less Servicing fee paid to the Servicer Each month the Servicer must: 1. Continue to report the contractual principal and interest payment in the monthly loanlevel transaction for each Mortgage subject to the SCRA interest rate reduction 2. Deposit the full contractual monthly payment of each Mortgage subject to the SCRA interest rate reduction into the Servicer’s Freddie Mac Custodial Account 3. Calculate the interest rate differential reimbursement due to the Servicer for the interest rate differential on each SCRA-capped Mortgage To effectively manage Mortgages that are eligible for the SCRA interest rate cap, Servicers should take the following steps: 1. Notify Freddie Mac via CSV file (see Exhibit 71, CSV File Format to Report Loans Eligible for the SCRA Interest Rate Subsidy) of each new Mortgage that becomes eligible for the SCRA interest rate cap 2. Request reimbursement of the interest rate differential on a monthly (or quarterly) basis via text file. (See Exhibit 72, Text File Format to Request SCRA Interest Rate Differential.) 3. Remove the loan from the text file (see Exhibit 72) and revert the Mortgage to the normal contractual interest rate 12 months after the end date of the Servicemember’s Period of Military Service Adjustments to each SCRA-capped Mortgage for the previous month must be reported via text file (see Exhibit 72) to Freddie Mac (see Directory 3) monthly, or if the Servicer chooses on a quarterly basis, not later than the third Business Day before the end of the month. Freddie Mac will enter the total credit in the “Adjustment Line” of the Monthly Account Statement (MAS) and will apply the credit against the amount Freddie Mac drafts for that Accounting Cycle and make the appropriate adjustment to the Principal and Interest Custodial Account. If, prior to the end of the month, an SCRA-capped Mortgage pays off or is involved in a Transfer of Servicing, or if the Servicemember’s Period of Military Service ends, the Servicer must complete a separate text file (see Exhibit 72) for the affected Mortgage and submit it to Freddie Mac (see Directory 3) within five Business Days and report via the Military Indulgence default related reporting event in accordance with Section 9102.6 and Exhibit 82, Default Reporting Dataset Guidelines, to indicate the end date of the period of military service if not previously reported. If the Servicer disagrees with the interest credit Freddie Mac gives the Servicer, the Servicer must notify Freddie Mac (see Directory 3) in writing within 30 days of the date of the MAS. The notification must state: 1. The Seller/Servicer number 2. The applicable Freddie Mac loan number(s) 3. A brief description of the problem 4. The unpaid balance for any disputed credit 5. Military orders* supporting the relief period requested *References to “military orders” in the Guide include the alternative documentation outlined in Section 8503.1(b) that Servicers may accept in lieu of official military orders. The Internal Revenue Service (IRS) Form 1098, Mortgage Interest Statement, that the Servicer files in accordance with Section 8106.2(a) should reflect the reduced interest amount paid by the Borrower during the rate cap period.

(e) Rate changes on SCRA-capped ARMs Freddie Mac notifies the Servicer of ANY changes on ARMs in accordance with Section 8502.2. When monthly net yield interest is reported on the Loan-Level Transaction for an SCRA-capped adjustable Mortgage, the Servicer must calculate the interest based on the new net yield shown in Freddie Mac’s Notification of ARMs Group Net Yield Adjustment. Freddie Mac will calculate the interest credit due to the Servicer in accordance with Section 8503.2(d).

(f) Servicing compensation for SCRA-capped Mortgages The Servicer’s compensation for Servicing an SCRA-capped Mortgage will be based on a Servicing Spread that remains at the rate in effect before the first month to which the rate cap applies.

(g) Retroactive rate cap for SCRA-capped Mortgages Retroactive application of the SCRA rate cap under Section 8503.2(a) must be processed as follows: (i) Reimbursement to the Servicemember The Servicer must calculate the difference between the amount of interest paid by the Servicemember at the contractual rate of interest and the amount of interest due at 6%, for the applicable benefit period. At the Servicemember’s option, the resulting amount may be credited to the UPB of the Mortgage or to reduce monthly Escrow installments, or refunded to the Servicemember. (ii) Reimbursement to the Servicer The Servicer must calculate the credit that results from the retroactive interest rate differential and notify Freddie Mac (see Directory 3) of the amount of the credit the Servicer is claiming (see Section 8503.2(d)). Freddie Mac will validate the credit amount the Servicer requests and enters it on the “Adjustment Line” of the Servicer’s MAS.