Freddie Mac Single-Family Seller/Servicer Guide 8801.3 — Loss mitigation for Cooperative Share Loans

This section contains requirements related to: ■ Assumptions and workout loan assumptions of Cooperative Share Loans ■ Loan modifications of Cooperative Share Loans ■ Short sales of Cooperative Share Loans ■ Deeds-in-lieu of foreclosure of Cooperative Share Loans ■ Charge-offs of Cooperative Share Loans

(a) Assumptions and workout loan assumptions of Cooperative Share Loans In the event an assumption or workout loan assumption (with or without a release of liability) of a Cooperative Share Loan is approved, then, in addition to the approval of the application for transfers of ownership requirements listed in Section 8406.2(c) and the approval conditions for a workout assumption in Section 9207.1(f), as applicable, the Servicer must: ■ Obtain the consent of the Cooperative Corporation, if such consent is required by the Proprietary Lease, and obtain a new stock certificate, if applicable ■ Ensure the transferee acquires the transferor’s ownership interest in the Cooperative Corporation (e.g., evidenced in a stock certificate) and either obtains a new Proprietary Lease or assumes the existing Proprietary Lease; and ■ If applicable, timely file a UCC-1 Financing Statement naming the transferee that became the debtor

(b) Loan modifications of Cooperative Share Loans When evaluating a Cooperative Share Loan Borrower for a loan modification under a Freddie Mac loan modification program, in addition to the modification requirements in Chapter 9206 and other loan modification requirements under the Purchase Documents, as applicable, the following requirements must be met: ■ The Servicer must ensure that the term of the Proprietary Lease must not terminate earlier than the maturity date of the proposed modified Cooperative Share Loan. If the current term of the Proprietary Lease terminates earlier than the maturity date of the proposed Cooperative Share Loan, then the term of the Proprietary Lease must be renegotiated to satisfy this requirement ■ For purposes of calculating the housing expense-to-income ratio(s), as applicable, the Servicer must make reasonable efforts to obtain written documentation verifying the monthly amounts of Cooperative Corporation assessments and Cooperative Unit Maintenance Fees ■ Consistent with the requirements in Section 9206.3(b), any delinquent Cooperative Share Loan expenses that may become First Liens on the property pursuant to Section 8801.2(c) may be capitalized, provided that such capitalization is not prohibited by applicable law Note: See also Section 8801.1(f) regarding certain Servicer warranties required in the event of a loan modification.

(c) Short sales of Cooperative Share Loans When evaluating a Cooperative Share Loan Borrower for a Freddie Mac Standard Short Sale (“short sale”), in addition to the short sale requirements in Chapter 9208, the following requirements must be met: ■ For purposes of calculating the housing expense-to-income ratio, if applicable, the Servicer must make reasonable efforts to obtain written documentation verifying the monthly amounts of Cooperative Corporation assessments and Cooperative Unit Maintenance Fees ■ If the Servicer is considering a Cooperative Share Loan Borrower for a short sale, then the Servicer is not delegated to approve the short sale, and the file must be sent to Freddie Mac. Pursuant to Section 9208.1(b), the Servicer must submit a short sale exception review in Resolve® with the following additional documentation: ❑ A detailed explanation of the Servicer’s recommendation and rationale for its recommendation documented in the comments section of Resolve. (Note: The Servicer must identify that the recommendation pertains to a Cooperative Share Loan.) ❑ The monthly amounts of Cooperative Corporation assessments and Cooperative Unit Maintenance Fees, as well as the total amounts of any delinquent Cooperative Share Loan expenses that may become First Liens on the property pursuant to Section 8801.2(c) In the event a short sale is approved, then, in addition to the requirements listed in Section 9208.3(a), the Servicer must: ■ Obtain the consent of the Cooperative Corporation, if such consent is required by the Proprietary Lease ■ Ensure the buyer acquires an ownership interest in the Cooperative Corporation (e.g., evidenced in a new stock certificate) and obtain either the assignment of the Proprietary Lease or a new Proprietary Lease ■ If applicable, timely file a termination statement for the UCC-1 Financing Statements; and ■ Unless otherwise instructed by Freddie Mac, pay, prior to and outside of the transaction, any delinquent Cooperative Share Loan expenses that may become First Liens on the property pursuant to Section 8801.2(c)

(d) Deeds-in-lieu of foreclosure of Cooperative Share Loans When evaluating a Cooperative Share Loan Borrower for a Freddie Mac Standard Deed-inLieu of Foreclosure (“deed-in-lieu of foreclosure”), in addition to the deed-in-lieu of foreclosure requirements in Chapter 9209, the following requirements must be met: ■ For purposes of calculating the housing expense-to-income ratio, if applicable, the Servicer must make reasonable efforts to obtain written documentation verifying the monthly amounts of Cooperative Corporation assessments and Cooperative Unit Maintenance Fees ■ If the Servicer is considering a Cooperative Share Loan Borrower for a deed-in-lieu of foreclosure, then the Servicer is not delegated to approve the deed-in-lieu of foreclosure, and the file must be sent to Freddie Mac. Pursuant to Section 9209.1, the Servicer must submit a deed-in-lieu of foreclosure exception review through Resolve with the following additional documentation: ❑ A detailed explanation of the Servicer’s recommendation and rationale for its recommendation documented in the comments section of Resolve. (Note: The Servicer must identify that the recommendation pertains to a Cooperative Share Loan.) ❑ The monthly amounts of Cooperative Corporation assessments and Cooperative Unit Maintenance Fees, as well as the total amounts of any delinquent Cooperative Share Loan expenses that may become First Liens on the property pursuant to Section 8801.2(c) In the event a deed-in-lieu of foreclosure is approved, then, in addition to the requirements listed in Section 9209.6, the Servicer must: ■ Obtain the consent of the Cooperative Corporation, if such consent is required by the Proprietary Lease, and obtain a new stock certificate ■ Ensure an ownership interest in the Cooperative Corporation is acquired (e.g., evidenced in a new stock certificate) and obtain either the assignment of the Proprietary Lease or a new Proprietary Lease ■ If applicable, timely file a termination statement for the UCC-1 Financing Statements; and ■ Unless otherwise instructed by Freddie Mac, pay any delinquent Cooperative Share Loan expenses that may become First Liens on the property pursuant to Section 8801.2(c)

(e) Charge-offs of Cooperative Share Loans In the event a charge-off of a Cooperative Share Loan is approved, then, in addition to the requirements listed in Section 9210.2, the Servicer must, if applicable, timely file a termination statement for the UCC-1 Financing Statements. Note: See also Section 9210.1(b) regarding when a Servicer must recommend a charge-off of a Cooperative Share Loan to Freddie Mac.