Freddie Mac Single-Family Seller/Servicer Guide 9402.1 — Freddie Mac rights and litigation types

This section contains requirements related to: ■ Freddie Mac rights ■ Routine and non-routine litigation

(a) Freddie Mac rights Freddie Mac reserves the right to direct and control all litigation involving a Freddie Macowned or guaranteed Mortgage, regardless of whether Freddie Mac is a named party. The Servicer and all law firms handling the litigation, whether selected and engaged pursuant to Chapter 9501 or Section 8601.5(g) or 9402.2(b), must cooperate fully with Freddie Mac in the prosecution, defense and handling of the matter. Note: Refer to Section 9401.1(b) for Freddie Mac rights when the requirements of this section regarding Servicer and law firm cooperation with Freddie Mac in the prosecution, defense and handling of litigation involving Freddie Mac-owned or guaranteed Mortgages are not met.

(b) Routine and non-routine litigation (i) Definition of routine and non-routine litigation The Servicer should be familiar with the following definitions: Definitions of routine and non-routine litigation N Non-routine litigation A contested action in which the Borrower alleges case-specific defenses or issues that, if successful, would create negative legal precedent beyond the immediate case Freddie Mac Single-Family Seller/Service Guide Definitions of routine and non-routine litigation R Routine litigation A contested action in which the Borrower alleges case-specific defenses or issues that, if successful, would not create negative legal precedent beyond the immediate case Examples of non-routine litigation that must be reported to Freddie Mac as non-routine litigation include, but are not limited to, the following: ■ Actions that name Freddie Mac as a party ■ Actions that seek monetary relief against Freddie Mac, including any claim (including counterclaims, cross-claims or third-party claims in foreclosure or bankruptcy actions) for damages against Freddie Mac or its officers, directors or employees ■ Actions that challenge the validity, priority or enforceability of a Freddie Mac-owned or guaranteed Mortgage or seek to impair Freddie Mac’s interest in an REO, including, by way of example: ❑ An action seeking to demolish a structure on the property or the property as a result of a code violation ❑ An action seeking to avoid a lien based on a failure to comply with a law or regulation ❑ An attempt by a junior lienholder to assert priority over a Freddie Mac-owned or guaranteed Mortgage or extinguish Freddie Mac’s interests ❑ A quiet title action seeking to declare Freddie Mac’s lien void; and ❑ An attempt by a Borrower to effect a cramdown of a Mortgage in bankruptcy as to which Freddie Mac has not delegated authority to the Servicer or law firm to address ■ Actions that present an issue that may pose significant legal or reputational risk to Freddie Mac include, by way of example: ❑ Any issue involving Freddie Mac’s conservatorship; its conservator, FHFA; Freddie Mac’s status as a federal instrumentality; or an interpretation of Freddie Mac’s charter ❑ Any assertion that Freddie Mac is a federal agency or otherwise part of the U.S. government Freddie Mac Single-Family Seller/Service Guide ❑ Any “due process” or other constitutional challenge ❑ Any challenge to the methods by which Freddie Mac does business ❑ Any putative class actions involving a Freddie Mac-owned or guaranteed Mortgage ❑ Challenges to the standing of the Servicer to conduct foreclosures or bankruptcies that, if successful, could create negative legal precedent with an impact beyond the immediate case ❑ Challenges to the methods by which MERS® does business or its ability to act as nominee under a Mortgage ❑ Any “show cause orders” or motions for sanctions relating to a Freddie Macowned or guaranteed Mortgage, whether against Freddie Mac, the Servicer, a law firm or a vendor of the Servicer or law firm ❑ Any appellate or other action for post-judgment relief in any foreclosure, bankruptcy or legal action in which Freddie Mac is a named party ❑ Foreclosures on HUD-Guaranteed Section 184 Native American Mortgages ❑ Any environmental litigation relating to a Freddie Mac-owned or guaranteed Mortgage ❑ A need to foreclose judicially in a State where non-judicial foreclosures predominate ❑ Any claim brought by a governmental body ❑ Cross-border insolvency proceedings under Chapter 15 of the Bankruptcy Code ❑ Any claim of predatory lending or discrimination in Mortgage origination or Servicing; and ❑ Any claim implicating the interpretation of the terms of the Fannie Mae/Freddie Mac Uniform Instruments ■ Actions involving an eNote or eMortgage (as those terms are defined in Section 1402.1(b)) Given the evolving nature of default-related litigation, it is not possible to provide an exhaustive list of non-routine litigation. Each contested action presents unique circumstances, and the Servicer should evaluate each action on a case-by-case basis to determine whether a contested action is routine or non-routine. Freddie Mac Single-Family Seller/Service Guide (ii) Legal actions and strategies initiated by the Servicer A Servicer must obtain written approval (see Directory 5) from the Freddie Mac Legal Division prior to initiating the following legal actions and strategies: ■ Filing a new legal action, other than a Freddie Mac Default Legal Matter, on behalf of Freddie Mac ■ Filing a motion to intervene in a pending legal action on behalf of Freddie Mac ■ Appealing or otherwise challenging a judgment in any foreclosure or bankruptcy proceeding or any legal action in which Freddie Mac is a named party ■ Filing a notice of removal to federal district court for any legal action in which Freddie Mac is a named party ■ Asserting any position in a legal action that relates to Freddie Mac’s status as a government-sponsored enterprise, its conservatorship, or its conservator, FHFA ■ Propounding discovery requests or otherwise serving or providing any discovery responses on behalf of Freddie Mac (iii)Referring to Freddie Mac in litigation Freddie Mac must be described in legal proceedings as “Federal Home Loan Mortgage Corporation (“Freddie Mac”), a corporation organized and existing under the laws of the United States of America.” Freddie Mac may not be referred to as a “government agency.” (iv) MERS-registered Mortgages See Section 8101.5(b) for additional requirements relating to notices from MERS and MERS-registered Mortgages.