Freddie Mac Single-Family Seller/Servicer Guide 9701.4 — Non-reimbursable expenses, adjustments and expense offsets

This section contains information related to: ■ Non-reimbursable expenses ■ Denials and adjustments of expense reimbursement requests ■ Default reporting requirements and reimbursement of claims ■ Expense offsets ■ Forwarding remittances to Freddie Mac

(a) Non-reimbursable expenses Consistent with Section 8101.1(b), standard operating costs incurred by a Servicer or its Servicing Agent and/or Outsourced Vendor(s), as applicable, in connection with the Servicer’s obligations and duties owed to Freddie Mac are part of the Servicer’s cost of doing business and, therefore, are not reimbursable by Freddie Mac unless expressly provided for otherwise in the Servicing Contract. Standard operating costs and expenses that are non-reimbursable by Freddie Mac (together referred to as “non-reimbursable expenses”) include, but are not limited to: ■ Appraisal reports, except when approved by Freddie Mac in advance ■ Attorneys fees resulting from correction of matters that should have been resolved preforeclosure, including any costs to resolve real property title issues that are the result of the Seller’s or Servicer’s actions or inactions ■ Documentary stamp taxes/transfer taxes/excise taxes on real estate conveyance (Freddie Mac is exempt under Title 12 of the United States Code, Section 1452(e)), unless the Servicer received Freddie Mac’s prior written approval via PAID (Payments Automated Intelligent and Dynamic) (see Exhibit 88, Servicing Tools). (See Section 9301.10(c) for additional requirements for reimbursement of transfer taxes after a foreclosure sale or when closing a deed-in-lieu of foreclosure transaction.) ■ Sales tax ■ Facsimile transmission (fax) charges ■ Interest, penalties (except for the first tax penalty (and second tax penalty in California as provided in Section 9701.2(a) incurred as defined in Section 9701.2(a))), late charges, collection expenses or legal fees for late payment of property taxes or condominium/homeowners association or Cooperative Corporation assessments unless otherwise provided in the Guide. (See Chapter 8801 for special Servicing requirements for Cooperative Share Loans.) ■ Long-distance telephone calls ■ Mailgram charges ■ Mileage or travel costs ■ Mortgage credit life insurance premiums ■ Other costs of an attorney, such as time or fees for curing a Delinquency, document preparation, word processing or notary public services performed by an attorney; cocounsel fees; referral fees, packaging fees or other similar fees and new case start-up fees ■ Photocopy costs ■ Photographs ■ Regular postage ■ The actual or imputed value of in-house counsel time expended when the reimbursable matter is handled by in-house counsel ■ Additional fees for preparing a foreclosure deed because the cost of doing so is included in the attorney’s fees listed in Exhibit 57A, Approved Attorney, Foreclosure, Mediation, Postponement Fees and Title Expenses ■ Credit reports ■ Additional fees or service charges billed by a law firm or any entities the firm relies upon to provide third-party support functions performed on the Servicer’s behalf that are considered included in the attorney’s fees listed in Exhibit 57A and Exhibit 57B, Approved Bankruptcy Attorney Fees ■ Additional fees or service charges that are billed by a law firm or any entity the Servicer relies upon and are associated with Servicer functions. Servicers should pay vendors for handling such Servicer functions at their own expense. For non-reimbursable expenses, Servicers or their Permitted Vendors (see Section 2405.1(b) regarding use of PAID by Permitted Vendors) should not be requesting Freddie Mac’s written pre-approval by submitting a request for pre-approval (RPA) via the RPA functionality in PAID for these expense amounts. If Freddie Mac determines that the Servicer has directly or indirectly passed or charged to Freddie Mac any non-reimbursable expenses or charged Freddie Mac for Servicing obligations covered by the Servicing Spread (as set forth in Section 8103.2(b)), then Freddie Mac may pursue any or all remedies available under the Guide, other Purchase Documents and applicable law.

(b) Denials and adjustments of expense reimbursement requests Freddie Mac reserves the right to withhold payment on a reimbursement request if: 1. Servicer fails to provide Freddie Mac with supporting documentation requested or in the time frame Freddie Mac requires 2. Freddie Mac did not receive the request within the expense reimbursement submission time frames (see Section 9701.1(e)) 3. The request includes expenses that are typically non-reimbursable unless the Servicer has obtained Freddie Mac’s written pre-approval 4. The request includes expenses for an amount in excess of the expense limits in Exhibit 57, 1- to 4-Unit Property Approved Expense Amounts; Exhibit 57A, Approved Attorney, Foreclosure, Mediation, Postponement Fees and Title Expenses; and Exhibit 57B, Approved Bankruptcy Attorney Fees, unless the Servicer obtained Freddie Mac’s written pre-approval. If Freddie Mac adjusts or denies the Servicer’s reimbursement request: ■ Information on the reason why Freddie Mac either adjusted or denied an expense reimbursement will be available in PAID ■ The Servicer may resubmit the reimbursement request via PAID provided the resubmission is within Freddie Mac’s time frame requirements, the Servicer claims only the disallowed expense and the appropriate documentation is attached and includes a justification for why the disallowed expense should be reimbursed

(c) Default reporting requirements and reimbursement of claims The legal fees and costs the Servicer submits must reflect the same default action dates as reported via EDR. Failure to report Delinquency, foreclosure, bankruptcy and other relevant EDR data will result in the adjustment or denial of the request.

(d) Expense offsets The Servicer must deduct certain funds from expenses incurred. These funds include positive Escrow balances at default, interest on Escrow balances, property insurance and primary mortgage insurance premium refunds. The Servicer’s requested expense reimbursements must be offset by any positive Escrow balance. Funds remaining in the Borrower’s Escrow account at default must be accounted for with the Servicer’s reimbursement request as income to offset expenses. Funds remaining in a temporary buydown account before the foreclosure action was started must be applied as set forth in Section 4204.3. Additionally, the Servicer is required to offset any incurred reimbursable expenses with the proceeds of rental income it receives during the foreclosure or REO holding period. Mortgage insurance premium refunds should be refunded directly to Freddie Mac by the MI on the claim for loss. If, however, the MI sends a refund of the mortgage insurance premium to the Servicer directly, the Servicer must credit the MI premium refund on the claim as income when it submits a request for expense reimbursement. In the following instances, Freddie Mac will bill the Servicer for the funds on the Performing Loans monthly Servicer Billing Statement or the Servicer Non-Performing Loans Invoice, respectively: ■ If the income reported by the Servicer exceeds the expenses requested ■ If the Servicer has no expenses currently being processed to offset the income that is due to Freddie Mac Note: Refer to Section 9102.1 for information on the payment of the Servicer Billing Statement and Non-Performing Loans Invoice via an Automated Clearing House draft. The Servicer must not offset anticipated or received mortgage insurance claim payments, property insurance claim proceeds or sales proceeds against any expenses incurred. (Refer to Section 9701.4(e) for information on remitting these funds to Freddie Mac.)

(e) Forwarding remittances to Freddie Mac The Servicer is required to forward, via wire transfer or check, non-REO-related funds to Freddie Mac (see Directory 5) and REO-related funds to Freddie Mac (see Directory 6) within 10 Business Days of the Servicer’s receipt of the funds. Such funds typically include, but are not limited to, mortgage insurance claim proceeds and property insurance claim proceeds. The Servicer must forward the funds to Freddie Mac via check or wire transfer as follows: ■ For non-REO-related funds, the Servicer must forward the funds via check payable to the Federal Home Loan Mortgage Corporation and include the Freddie Mac loan number along with copies of related documentation with the check ■ For REO-related funds, the Servicer must forward the funds via check or wire transfer as follows: ❑ Remittances forwarded by check must be payable to the Federal Home Loan Mortgage Corporation and include the Freddie Mac loan number along with copies of related documentation with the check ❑ Remittances forwarded by wire transfer must reference the Freddie Mac loan number, address of property and the type of proceeds (e.g., REO repurchases, mortgage insurance claim proceeds and property insurance claim proceeds) The Servicer must not offset any expenses against property insurance claim proceeds or mortgage insurance claim proceeds.

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 information related to: ■ Non-reimbursable expenses ■ Denials and adjustments of expense reimbursement requests ■ Default reporting requirements and reimbursement of claims ■ Expense offsets ■ Forwarding remittances to Freddie Mac

(a) Non-reimbursable expenses Consistent with Section 8101.1(b), standard operating costs incurred by a Servicer or its Servicing Agent and/or Outsourced Vendor(s), as applicable, in connection with the Servicer’s obligations and duties owed to Freddie Mac are part of the Servicer’s cost of doing business and, therefore, are not reimbursable by Freddie Mac unless expressly provided for otherwise in the Servicing Contract. Standard operating costs and expenses that are non-reimbursable by Freddie Mac (together referred to as “non-reimbursable expenses”) include, but are not limited to: ■ Appraisal reports, except when approved by Freddie Mac in advance ■ Attorneys fees resulting from correction of matters that should have been resolved preforeclosure, including any costs to resolve real property title issues that are the result of the Seller’s or Servicer’s actions or inactions ■ Documentary stamp taxes/transfer taxes/excise taxes on real estate conveyance (Freddie Mac is exempt under Title 12 of the United States Code, Section 1452(e)), unless the Servicer received Freddie Mac’s prior written approval via PAID (Payments Automated Intelligent and Dynamic) (see Exhibit 88, Servicing Tools). (See Section 9301.10(c) for additional requirements for reimbursement of transfer taxes after a foreclosure sale or when closing a deed-in-lieu of foreclosure transaction.) ■ Sales tax ■ Facsimile transmission (fax) charges ■ Interest, penalties (except for the first tax penalty (and second tax penalty in California as provided in Section 9701.2(a) incurred as defined in Section 9701.2(a))), late charges, collection expenses or legal fees for late payment of property taxes or condominium/homeowners association or Cooperative Corporation assessments unless otherwise provided in the Guide. (See Chapter 8801 for special Servicing requirements for Cooperative Share Loans.) ■ Long-distance telephone calls ■ Mailgram charges ■ Mileage or travel costs ■ Mortgage credit life insurance premiums ■ Other costs of an attorney, such as time or fees for curing a Delinquency, document preparation, word processing or notary public services performed by an attorney; cocounsel fees; referral fees, packaging fees or other similar fees and new case start-up fees ■ Photocopy costs ■ Photographs ■ Regular postage ■ The actual or imputed value of in-house counsel time expended when the reimbursable matter is handled by in-house counsel ■ Additional fees for preparing a foreclosure deed because the cost of doing so is included in the attorney’s fees listed in Exhibit 57A, Approved Attorney, Foreclosure, Mediation, Postponement Fees and Title Expenses ■ Credit reports ■ Additional fees or service charges billed by a law firm or any entities the firm relies upon to provide third-party support functions performed on the Servicer’s behalf that are considered included in the attorney’s fees listed in Exhibit 57A and Exhibit 57B, Approved Bankruptcy Attorney Fees ■ Additional fees or service charges that are billed by a law firm or any entity the Servicer relies upon and are associated with Servicer functions. Servicers should pay vendors for handling such Servicer functions at their own expense. For non-reimbursable expenses, Servicers or their Permitted Vendors (see Section 2405.1(b) regarding use of PAID by Permitted Vendors) should not be requesting Freddie Mac’s written pre-approval by submitting a request for pre-approval (RPA) via the RPA functionality in PAID for these expense amounts. If Freddie Mac determines that the Servicer has directly or indirectly passed or charged to Freddie Mac any non-reimbursable expenses or charged Freddie Mac for Servicing obligations covered by the Servicing Spread (as set forth in Section 8103.2(b)), then Freddie Mac may pursue any or all remedies available under the Guide, other Purchase Documents and applicable law.

(b) Denials and adjustments of expense reimbursement requests Freddie Mac reserves the right to withhold payment on a reimbursement request if: 1. Servicer fails to provide Freddie Mac with supporting documentation requested or in the time frame Freddie Mac requires 2. Freddie Mac did not receive the request within the expense reimbursement submission time frames (see Section 9701.1(e)) 3. The request includes expenses that are typically non-reimbursable unless the Servicer has obtained Freddie Mac’s written pre-approval 4. The request includes expenses for an amount in excess of the expense limits in Exhibit 57, 1- to 4-Unit Property Approved Expense Amounts; Exhibit 57A, Approved Attorney, Foreclosure, Mediation, Postponement Fees and Title Expenses; and Exhibit 57B, Approved Bankruptcy Attorney Fees, unless the Servicer obtained Freddie Mac’s written pre-approval. If Freddie Mac adjusts or denies the Servicer’s reimbursement request: ■ Information on the reason why Freddie Mac either adjusted or denied an expense reimbursement will be available in PAID ■ The Servicer may resubmit the reimbursement request via PAID provided the resubmission is within Freddie Mac’s time frame requirements, the Servicer claims only the disallowed expense and the appropriate documentation is attached and includes a justification for why the disallowed expense should be reimbursed

(c) Default reporting requirements and reimbursement of claims The legal fees and costs the Servicer submits must reflect the same default action dates as reported via EDR. Failure to report Delinquency, foreclosure, bankruptcy and other relevant EDR data will result in the adjustment or denial of the request.

(d) Expense offsets The Servicer must deduct certain funds from expenses incurred. These funds include positive Escrow balances at default, interest on Escrow balances, property insurance and primary mortgage insurance premium refunds. The Servicer’s requested expense reimbursements must be offset by any positive Escrow balance. Funds remaining in the Borrower’s Escrow account at default must be accounted for with the Servicer’s reimbursement request as income to offset expenses. Funds remaining in a temporary buydown account before the foreclosure action was started must be applied as set forth in Section 4204.3. Additionally, the Servicer is required to offset any incurred reimbursable expenses with the proceeds of rental income it receives during the foreclosure or REO holding period. Mortgage insurance premium refunds should be refunded directly to Freddie Mac by the MI on the claim for loss. If, however, the MI sends a refund of the mortgage insurance premium to the Servicer directly, the Servicer must credit the MI premium refund on the claim as income when it submits a request for expense reimbursement. In the following instances, Freddie Mac will bill the Servicer for the funds on the Performing Loans monthly Servicer Billing Statement or the Servicer Non-Performing Loans Invoice, respectively: ■ If the income reported by the Servicer exceeds the expenses requested ■ If the Servicer has no expenses currently being processed to offset the income that is due to Freddie Mac Note: Refer to Section 9102.1 for information on the payment of the Servicer Billing Statement and Non-Performing Loans Invoice via an Automated Clearing House draft. The Servicer must not offset anticipated or received mortgage insurance claim payments, property insurance claim proceeds or sales proceeds against any expenses incurred. (Refer to Section 9701.4(e) for information on remitting these funds to Freddie Mac.)

(e) Forwarding remittances to Freddie Mac The Servicer is required to forward, via wire transfer or check, non-REO-related funds to Freddie Mac (see Directory 5) and REO-related funds to Freddie Mac (see Directory 6) within 10 Business Days of the Servicer’s receipt of the funds. Such funds typically include, but are not limited to, mortgage insurance claim proceeds and property insurance claim proceeds. The Servicer must forward the funds to Freddie Mac via check or wire transfer as follows: ■ For non-REO-related funds, the Servicer must forward the funds via check payable to the Federal Home Loan Mortgage Corporation and include the Freddie Mac loan number along with copies of related documentation with the check ■ For REO-related funds, the Servicer must forward the funds via check or wire transfer as follows: ❑ Remittances forwarded by check must be payable to the Federal Home Loan Mortgage Corporation and include the Freddie Mac loan number along with copies of related documentation with the check ❑ Remittances forwarded by wire transfer must reference the Freddie Mac loan number, address of property and the type of proceeds (e.g., REO repurchases, mortgage insurance claim proceeds and property insurance claim proceeds) The Servicer must not offset any expenses against property insurance claim proceeds or mortgage insurance claim proceeds.

■ Non-reimbursable expenses ■ Denials and adjustments of expense reimbursement requests ■ Default reporting requirements and reimbursement of claims ■ Expense offsets ■ Forwarding remittances to Freddie Mac

(a) Non-reimbursable expenses Consistent with Section 8101.1(b), standard operating costs incurred by a Servicer or its Servicing Agent and/or Outsourced Vendor(s), as applicable, in connection with the Servicer’s obligations and duties owed to Freddie Mac are part of the Servicer’s cost of doing business and, therefore, are not reimbursable by Freddie Mac unless expressly provided for otherwise in the Servicing Contract. Standard operating costs and expenses that are non-reimbursable by Freddie Mac (together referred to as “non-reimbursable expenses”) include, but are not limited to: ■ Appraisal reports, except when approved by Freddie Mac in advance ■ Attorneys fees resulting from correction of matters that should have been resolved preforeclosure, including any costs to resolve real property title issues that are the result of the Seller’s or Servicer’s actions or inactions ■ Documentary stamp taxes/transfer taxes/excise taxes on real estate conveyance (Freddie Mac is exempt under Title 12 of the United States Code, Section 1452(e)), unless the Servicer received Freddie Mac’s prior written approval via PAID (Payments Automated Intelligent and Dynamic) (see Exhibit 88, Servicing Tools). (See Section 9301.10(c) for additional requirements for reimbursement of transfer taxes after a foreclosure sale or when closing a deed-in-lieu of foreclosure transaction.) ■ Sales tax ■ Facsimile transmission (fax) charges ■ Interest, penalties (except for the first tax penalty (and second tax penalty in California as provided in Section 9701.2(a) incurred as defined in Section 9701.2(a))), late charges, collection expenses or legal fees for late payment of property taxes or condominium/homeowners association or Cooperative Corporation assessments unless otherwise provided in the Guide. (See Chapter 8801 for special Servicing requirements for Cooperative Share Loans.) ■ Long-distance telephone calls ■ Mailgram charges ■ Mileage or travel costs ■ Mortgage credit life insurance premiums ■ Other costs of an attorney, such as time or fees for curing a Delinquency, document preparation, word processing or notary public services performed by an attorney; cocounsel fees; referral fees, packaging fees or other similar fees and new case start-up fees ■ Photocopy costs ■ Photographs ■ Regular postage ■ The actual or imputed value of in-house counsel time expended when the reimbursable matter is handled by in-house counsel ■ Additional fees for preparing a foreclosure deed because the cost of doing so is included in the attorney’s fees listed in Exhibit 57A, Approved Attorney, Foreclosure, Mediation, Postponement Fees and Title Expenses ■ Credit reports ■ Additional fees or service charges billed by a law firm or any entities the firm relies upon to provide third-party support functions performed on the Servicer’s behalf that are considered included in the attorney’s fees listed in Exhibit 57A and Exhibit 57B, Approved Bankruptcy Attorney Fees ■ Additional fees or service charges that are billed by a law firm or any entity the Servicer relies upon and are associated with Servicer functions. Servicers should pay vendors for handling such Servicer functions at their own expense. For non-reimbursable expenses, Servicers or their Permitted Vendors (see Section 2405.1(b) regarding use of PAID by Permitted Vendors) should not be requesting Freddie Mac’s written pre-approval by submitting a request for pre-approval (RPA) via the RPA functionality in PAID for these expense amounts. If Freddie Mac determines that the Servicer has directly or indirectly passed or charged to Freddie Mac any non-reimbursable expenses or charged Freddie Mac for Servicing obligations covered by the Servicing Spread (as set forth in Section 8103.2(b)), then Freddie Mac may pursue any or all remedies available under the Guide, other Purchase Documents and applicable law.

(b) Denials and adjustments of expense reimbursement requests Freddie Mac reserves the right to withhold payment on a reimbursement request if: 1. Servicer fails to provide Freddie Mac with supporting documentation requested or in the time frame Freddie Mac requires 2. Freddie Mac did not receive the request within the expense reimbursement submission time frames (see Section 9701.1(e)) 3. The request includes expenses that are typically non-reimbursable unless the Servicer has obtained Freddie Mac’s written pre-approval 4. The request includes expenses for an amount in excess of the expense limits in Exhibit 57, 1- to 4-Unit Property Approved Expense Amounts; Exhibit 57A, Approved Attorney, Foreclosure, Mediation, Postponement Fees and Title Expenses; and Exhibit 57B, Approved Bankruptcy Attorney Fees, unless the Servicer obtained Freddie Mac’s written pre-approval. If Freddie Mac adjusts or denies the Servicer’s reimbursement request: ■ Information on the reason why Freddie Mac either adjusted or denied an expense reimbursement will be available in PAID ■ The Servicer may resubmit the reimbursement request via PAID provided the resubmission is within Freddie Mac’s time frame requirements, the Servicer claims only the disallowed expense and the appropriate documentation is attached and includes a justification for why the disallowed expense should be reimbursed

(c) Default reporting requirements and reimbursement of claims The legal fees and costs the Servicer submits must reflect the same dates as reported via the associated default related reporting event. Failure to report Delinquency, foreclosure, bankruptcy and other relevant default related reporting events will result in the adjustment or denial of the request.

(d) Expense offsets The Servicer must deduct certain funds from expenses incurred. These funds include positive Escrow balances at default, interest on Escrow balances, property insurance and primary mortgage insurance premium refunds. The Servicer’s requested expense reimbursements must be offset by any positive Escrow balance. Funds remaining in the Borrower’s Escrow account at default must be accounted for with the Servicer’s reimbursement request as income to offset expenses. Funds remaining in a temporary buydown account before the foreclosure action was started must be applied as set forth in Section 4204.3. Additionally, the Servicer is required to offset any incurred reimbursable expenses with the proceeds of rental income it receives during the foreclosure or REO holding period. Mortgage insurance premium refunds should be refunded directly to Freddie Mac by the MI on the claim for loss. If, however, the MI sends a refund of the mortgage insurance premium to the Servicer directly, the Servicer must credit the MI premium refund on the claim as income when it submits a request for expense reimbursement. In the following instances, Freddie Mac will bill the Servicer for the funds on the Performing Loans monthly Servicer Billing Statement or the Servicer Non-Performing Loans Invoice, respectively: ■ If the income reported by the Servicer exceeds the expenses requested ■ If the Servicer has no expenses currently being processed to offset the income that is due to Freddie Mac Note: Refer to Section 9102.1 for information on the payment of the Servicer Billing Statement and Non-Performing Loans Invoice via an Automated Clearing House draft. The Servicer must not offset anticipated or received mortgage insurance claim payments, property insurance claim proceeds or sales proceeds against any expenses incurred. (Refer to Section 9701.4(e) for information on remitting these funds to Freddie Mac.)

(e) Forwarding remittances to Freddie Mac The Servicer is required to forward, via wire transfer or check, non-REO-related funds to Freddie Mac (see Directory 5) and REO-related funds to Freddie Mac (see Directory 6) within 10 Business Days of the Servicer’s receipt of the funds. Such funds typically include, but are not limited to, mortgage insurance claim proceeds and property insurance claim proceeds. The Servicer must forward the funds to Freddie Mac via check or wire transfer as follows: ■ For non-REO-related funds, the Servicer must forward the funds via check payable to the Federal Home Loan Mortgage Corporation and include the Freddie Mac loan number along with copies of related documentation with the check ■ For REO-related funds, the Servicer must forward the funds via check or wire transfer as follows: ❑ Remittances forwarded by check must be payable to the Federal Home Loan Mortgage Corporation and include the Freddie Mac loan number along with copies of related documentation with the check ❑ Remittances forwarded by wire transfer must reference the Freddie Mac loan number, address of property and the type of proceeds (e.g., REO repurchases, mortgage insurance claim proceeds and property insurance claim proceeds) The Servicer must not offset any expenses against property insurance claim proceeds or mortgage insurance claim proceeds.