Freddie Mac Single-Family Seller/Servicer Guide 9209.3 — Deeds-in-lieu of foreclosure Borrower contributions and relocation assistance

This section contains requirements related to: ■ Borrower contributions towards the deficiency ■ Borrower relocation assistance

(a) Borrower contributions towards the deficiency If the Servicer determines that the Borrower’s Cash Reserves (as defined in Section 9209.2(b)(iv)(C)(I)) exceed $10,000 or the Borrower’s housing expense-to-income (HTI) ratio is less than or equal to 40%, the Servicer must request a cash contribution in accordance with the requirements below. The Servicer must verbally confirm the assets reported on Form 710, Mortgage Assistance Application, and reconcile any differences with documentation following the procedure in Section 9202.1(c). A Servicer may negotiate contribution amounts less than the initial contribution requests, which must be determined in accordance with the contribution formula in this section. When a Servicer negotiates a cash contribution that is less than the initial request, the Servicer must document the reason for its decision in the Mortgage file and note the specific financial circumstances that limit the Borrower’s ability to contribute towards the deficiency. Unless Freddie Mac has delegated authority with the MI or communicates otherwise, if the Mortgage is covered by mortgage insurance and the MI requires a contribution from the Borrower that is greater than the contribution limits required by this section in order to approve the Freddie Mac Standard Deed-in-Lieu of Foreclosure (“deed-in-lieu of foreclosure”), the Servicer must require the Borrower to make the contribution required by the MI as a condition of approval. Borrowers are not required to make a contribution in the following instances: ■ Borrowers who are Servicemembers (see Section 8503.1) with Permanent Change of Station (PCS) orders who are 90 or more days delinquent. The property securing the Mortgage is or was previously the Borrower’s Primary Residence where the transfer or new employment location is greater than 50 miles one-way from the property securing the Mortgage being evaluated. ■ Borrowers who qualify for a Streamlined Deed-in-Lieu of Foreclosure (refer to Section 9209.2) ■ Applicable law prohibits requesting or receiving a contribution If the Borrower’s Cash Reserves exceed $10,000 or his or her HTI ratio is less than or equal to 40%, the Servicer must request the greater of 20% of the Cash Reserves or four times the Borrower’s principal, interest, taxes and insurance, rounded to the nearest $100 as a cash contribution. The cash contribution cannot exceed the total amount of the deficiency. If a Borrower is 60 or more days delinquent and cannot contribute 20% of his or her Cash Reserves, the Servicer may negotiate a lower level of contribution. If the Servicer negotiates and collects less than 20% of the Borrower’s Cash Reserves, then the Servicer must document in the Mortgage file the specific financial circumstances that limit the Borrower’s ability to make the initially requested level of cash contribution (i.e., 20% of the Borrower’s Cash Reserves). Based on the Servicer’s assessment of the Borrower’s written or stated ability to pay in combination with its evaluation of the Borrower’s financial and hardship information, the Servicer is authorized to negotiate a lower contribution or agree that the Borrower’s individual situation and circumstances warrant a lower starting point to cash contribution negotiations or no contribution. If a Borrower is unwilling to contribute an amount the Servicer deems acceptable, then the deed-in-lieu of foreclosure is not delegated and must be submitted to Freddie Mac in the manner outlined in Section 9209.1. If the Servicer determines the Borrower is unable to contribute at least $500 toward the deficiency, then the Servicer must not collect a cash contribution. If the Borrower’s Cash Reserves are in excess of $50,000, the Servicer must submit the deed-in-lieu of foreclosure request to Freddie Mac for review. Note: Refer to Section 9209.1 regarding the details for submitting a deed-in-lieu of foreclosure recommendation to Freddie Mac.

(b) Borrower relocation assistance If the Servicer determines that the Borrower is not required to make a financial contribution toward the deficiency, the Borrower is eligible to receive up to $7,500 in relocation assistance provided that the Borrower occupies the Mortgaged Premises as his or her primary residence. The Borrower is not eligible to receive relocation assistance in the following circumstances: ■ The Borrower will receive relocation assistance from a source other than Freddie Mac or the Servicer, such as an employer, and the amount is equal to or greater than $7,500. If the Borrower will receive relocation assistance from a source other than Freddie Mac or the Servicer and the amount is less than $7,500, the Servicer must reduce the amount of Freddie Mac’s relocation assistance by the amount received from the other source. ■ The Servicer determines that the Borrower’s Cash Reserves exceed the greater of $10,000 or four times the Borrower’s total monthly Mortgage payment, regardless of whether the Borrower makes a contribution. If the Servicer believes such a Borrower is experiencing financial circumstances necessitating relocation assistance, the Servicer may submit the file to Freddie Mac. Refer to Section 9209.1 regarding the details for submission to Freddie Mac. ■ The Borrower is subject to PCS orders and receives government assistance with the relocation Once the final amount of relocation assistance has been determined and the deed has been executed, the Servicer must disburse to the Borrower the relocation assistance payment. Unless otherwise instructed by Freddie Mac, the Servicers must distribute the relocation assistance funds no more than 30 days after execution of the deed. Servicers may request reimbursement for the relocation assistance from Freddie Mac via PAID (Payments Automated Intelligent and Dynamic) (see Exhibit 88, Servicing Tools). In addition to the relocation assistance offered by Freddie Mac, the Servicer may in its discretion offer the Borrower an additional financial incentive to complete the deed-in-lieu of foreclosure. Any relocation assistance provided by the Servicer will be in addition to the relocation assistance amount provided by Freddie Mac, and the Servicer’s assistance amount does not have to be subtracted from the assistance amount Freddie Mac will pay. If the Servicer does offer its own relocation assistance, it must provide the assistance from its own funds as a payment made directly to the Borrower. The relocation assistance payment may not be applied to other debts secured by the Mortgaged Premises.