Freddie Mac Single-Family Seller/Servicer Guide 9501.6 — File transfers, termination and suspension of firms

This section contains requirements related to: ■ File transfers, termination and suspension of firms ■ Implementing file transfers and/or the termination and suspension of firms ■ Reservation of rights and remedies for non-compliance concerning litigation

(a) File transfers, termination and suspension of firms (i) Servicer-directed suspension of referrals, Freddie Mac Default Legal Matter transfers and terminations If a Servicer becomes aware of information regarding a firm’s handling of Freddie Mac Default Legal Matters that might warrant a suspension of referrals of new Freddie Mac Default Legal Matters, the transfer of Freddie Mac Default Legal Matters to another firm and/or termination of the firm (such as for legal, reputational or operational risk), the Servicer must: ■ Notify Freddie Mac within two Business Days via e-mail or sooner if circumstances warrant, as set forth in Section 9501.5(d); and ■ Conduct due diligence with respect to the issue If the Servicer intends to suspend referrals of new Freddie Mac Default Legal Matters, transfer Freddie Mac Default Legal Matters and/or terminate a firm, the Servicer must provide Freddie Mac with at least five Business Days’ notice (see Directory 1) prior to implementing the decision. Additionally, the notification must provide Freddie Mac with the implementation plan for the course of action chosen by the Servicer, pursuant to Section 9501.6(b). For the transfer of Freddie Mac Default Legal Matters, once a Servicer has determined the eligible law firm(s) that will receive such file transfers, the following must also be included in the notification to Freddie Mac: ■ Servicer name and the six-digit Seller/Servicer number ■ The nine-digit Freddie Mac loan number ■ Servicer loan number ■ Date of transfer ■ Original law firm name ■ New law firm name ■ Freddie Mac Default Legal Matter being transferred (e.g., foreclosure, bankruptcy proof of claim (POC) or bankruptcy motion for relief (MFR)) to the new law firm ■ The State in which the Mortgaged Premises is located In addition, the Servicer must: ■ Upon request, provide Freddie Mac with the reason for the decision and the due diligence materials or other information supporting the decision ■ Inform the firm of the decision; and ■ Keep Freddie Mac periodically updated with respect to the status of implementation of the decision Note: Refer to Section 9501.6(b) for additional information relating to implementation of terminations, transfer of Freddie Mac Default Legal Matters and suspensions. (ii) Freddie Mac-directed suspension of referrals, matter transfers and terminations Freddie Mac may direct the Servicer to initiate an investigation of a firm if Freddie Mac becomes aware of information that might warrant a suspension of: ■ Referrals of new Freddie Mac Default Legal Matters ■ The transfer of Freddie Mac Default Legal Matters, or ■ Termination of the firm Freddie Mac also may conduct due diligence and investigations as necessary. Freddie Mac may instruct Servicers to suspend some or all referrals of new Freddie Mac Default Legal Matters, transfer some or all existing Freddie Mac Default Legal Matters or terminate a firm. In the event of a decision by Freddie Mac to suspend referrals of new Freddie Mac Default Legal Matters, transfer Freddie Mac Default Legal Matters or terminate a firm, Freddie Mac will: ■ Inform the Servicer of the decision and provide direction with respect to required Servicer actions, including direction with respect to transfers of Freddie Mac Default Legal Matters ■ Inform the firm of the decision and provide direction to the firm with respect to required firm actions; and ■ Terminate the limited retention agreement between Freddie Mac and the firm, as appropriate (iii)Documentation of due diligence review The Servicer must maintain documentation of the due diligence review, the Servicer’s decision and all other information supporting the decision for a period of seven years after such decision.

(b) Implementing file transfers and/or the termination and suspension of firms (i) Implementation plan Prior to implementing any decision to terminate a contract with a firm, suspend referrals of new Freddie Mac Default Legal Matters and/or transfer Freddie Mac Default Legal Matters from a firm, the Servicer must develop an implementation plan which addresses: ■ File transfers ■ The capacity of other eligible firms in the jurisdiction to handle additional Freddie Mac Default Legal Matters and/or transferred Freddie Mac Default Legal Matters ■ Proration of fees and costs between the transferor and transferee firms ■ Contract provisions during any transition period, including insurance; and ■ Other issues as necessary The implementation plan must take into account any legal, operational or reputational risks that may arise during the transition period and must address these risks in the most cost-efficient and effective manner. Freddie Mac reserves the right to require the modification of the implementation plan and provide additional Servicer requirements relating to the termination of any firm, the suspension of referrals of new Freddie Mac Default Legal Matters and the transfer of Freddie Mac Default Legal Matters. (ii) Servicer monitoring of implementation plan The Servicer must take all necessary steps to ensure that the implementation plan proceeds in an orderly manner and that all Freddie Mac interests are protected during the implementation. Such steps include, but are not limited to: ■ Transferring files relating to Freddie Mac Default Legal Matters to eligible firms ■ Addressing any issues arising from the transfer of files, the suspension of referrals and the termination of a firm ■ Reporting periodically to Freddie Mac on the status of the plan, including such details as how many files are transferred to each new firm, which new firms receive the files and the timing of transfers; and ■ Such other details as requested by Freddie Mac Servicers may not charge Freddie Mac or Borrowers for any fees or costs associated with transferring Freddie Mac Default Legal Matters, and such amounts may not be added to Borrower Mortgage balances. (iii)Freddie Mac’s rights to manage termination, suspension and/or file transfers Freddie Mac may decide, in its sole discretion, that the legal, operational or reputational risks necessitate Freddie Mac’s management of the: ■ Termination of any firm with respect to its handling of Freddie Mac Default Legal Matters ■ Suspension of referrals of Freddie Mac Default Legal Matters to a firm; and/or ■ Transfers of files relating to Freddie Mac Default Legal Matters In such case, the Servicer must cooperate with Freddie Mac in such management and provide all necessary documentation, files and information as requested by Freddie Mac.

(c) Reservation of rights and remedies for non-compliance concerning litigation (i) Reservation of rights Freddie Mac reserves the right to direct and control all litigation involving a Freddie Mac loan. The Servicer and firm handling the litigation must cooperate fully with Freddie Mac in the prosecution, defense or handling of the matter. In addition, Freddie Mac reserves the right to: ■ Select the foreclosure counsel for a particular case, whether the case is routine or nonroutine litigation ■ Direct and manage the actions taken by the foreclosure counsel on a case-by-case or individual jurisdiction basis ■ Assess additional compensatory fees against the Servicer and/or seek repayment of losses, costs or damages from the Servicer sustained due to errors, omissions or delays by the Servicer or its agent; and ■ Direct and manage the actions taken by Servicers and firms relating to escalated issues specified in Section 9501.5(d) (ii) Remedies for non-compliance If a Servicer fails to comply with the provisions under Chapter 9501, Freddie Mac, in its sole discretion and in addition to any other remedies specified in the Guide or the Servicer’s other Purchase Documents, reserves the right to: ■ Refuse to reimburse the Servicer for any legal fees and costs ■ Offset the entire legal fee from future foreclosure expenses otherwise eligible for reimbursement from Freddie Mac or seek the Servicer’s reimbursement of the entire legal fee with interest if Freddie Mac has already reimbursed the Servicer for the costs involved in the particular foreclosure or bankruptcy ■ Require the Servicer to reimburse the firm or Freddie Mac for any prohibited payments or other financial benefits ■ Prohibit the Servicer from contracting, directly or through any service provider, vendor or outsourcing company, with a firm with respect to products or services ancillary to a foreclosure or bankruptcy case ■ Prohibit the Servicer from contracting with the service provider, vendor or outsourcing company involved in the prohibited activities with respect to Freddie Mac-owned or guaranteed Mortgages ■ Seek Servicer repayment of losses, costs or damages sustained by Freddie Mac due to errors by the Servicer or its agent and/or require repurchase of impacted Mortgage