Freddie Mac Document Custody Procedures Handbook

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Document Custody Procedures Handbook

Freddie Mac Document Document Custody Procedures Handbook

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Table of Contents

DOCUMENT CUSTODIAL OPTIONS AND REQUIREMENTS

Overview................................................................................................................................................ 2Document Custodians ........................................................................................................................... 2Eligibility .................................................................................................................................................3Application and Approval Process......................................................................................................... 4Annual Reporting ................................................................................................................................... 4Terminating the Custodial Relationship................................................................................................. 4

DUTIES AND RESPONSIBILITIES

Compliance and Controls ......................................................................................................................2Changes to Institution Information......................................................................................................... 7Insurance Coverage ..............................................................................................................................8

DOCUMENT DELIVERY AND PROCESSING PROCEDURES

Background............................................................................................................................................ 2Documentation to be Verified ................................................................................................................3Verification Requirements......................................................................................................................3Data Verification .................................................................................................................................... 4Note Verification ..................................................................................................................................11Borrowers Signature ........................................................................................................................... 11Uniform Instruments ............................................................................................................................ 15Lost Note Affidavits..............................................................................................................................15Endorsements......................................................................................................................................16Assignments ........................................................................................................................................ 19Reviewing Supplemental Documentation............................................................................................ 21Resolving Discrepancies .....................................................................................................................23Retention Period ..................................................................................................................................23

New York Consolidation, Extension and Modification Agreements (NY CEMAs) ............................23MERS-Registered Mortgages..............................................................................................................25

MIDANET DELIVERY AND PROCESSING PROCEDURES

Introduction ............................................................................................................................................ 2Verify Data and Documentation............................................................................................................. 2Resolving Discrepancies ....................................................................................................................... 2Completing Certification.........................................................................................................................3MERS Registered Mortgages................................................................................................................ 4

DOCUMENT RELEASE PROCEDURES

Introduction ............................................................................................................................................ 2Form 1036 Requirements......................................................................................................................2

Document Release Types .....................................................................................................................3New York Consolidation, Extension and Modification Agreement (NY CEMA) Mortgage NoteRelease Procedures ..............................................................................................................................3Return of Released Documents ............................................................................................................4Control and Safekeeping of Released Documents ...............................................................................4Retention Period .................................................................................................................................... 4


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SUBSEQUENT TRANSFERS OF SERVICING AND CUSTODY PROCEDURES

Introduction ............................................................................................................................................ 2General Responsibilities ........................................................................................................................ 2Evidence of Transferee Document Custodian Approval ....................................................................... 3Transferor Document Custodian Responsibilities ................................................................................. 3Transferee Document Custodian Responsibilities ................................................................................ 4Transfers of Servicing of MERS Registered Mortgages........................................................................5Termination of Custodial Agreement .....................................................................................................6

Extension Approval................................................................................................................................6PROCESSING BALLOON/RESET MORTGAGES

Overview................................................................................................................................................ 2Processing Balloon/Reset Mortgages ................................................................................................... 2Certifying Balloon Loan Modifications ................................................................................................... 3Loan Modification Custody .................................................................................................................... 4

JOB AIDS

Fixed Rate Note..................................................................................................................................... 1Adjustable Rate Note (5 Year Treasury Index) ..................................................................................... 1Adjustable Rate Note (1 Year Treasury Index) ..................................................................................... 1Initial Interest Adustable Rate Note ....................................................................................................... 1

Balloon Note .......................................................................................................................................... 1Chain of Assignments and Endorsements ............................................................................................1


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Preface (01/10)

This Handbook is intended to supplement the requirements and information inFreddie Mac's Single-Family Seller/Servicer Guide (the Guide, which is one ofthe Purchase Documents). The Guide has priority over this Handbook, so that

any conflict between them, such as may occur when the Guide is updated oramended, should be resolved to favor the Guide. Similarly, conflicts between theGuide and Form 1035, the Custodial Agreement, are resolved to favor the Guide;thus, Form 1035 need not be re-executed or amended to reflect changes in theGuide. We intend to update the Handbook periodically.

Capitalized terms used in the Handbook are defined in the Guide; however,please note that certain terms and phrases, including the following, may be useddifferently in the Handbook:

"Note" refers to the note evidencing a borrower's indebtedness, and

includes any Power of Attorney or modifying instrument, such as amodification agreement, conversion agreement, and assumption of liabilityor release of liability agreement. "Notes" may also refer to all documentsheld for Freddie Mac, as the context requires. "Assignment" refers to theIntervening Assignments and includes any instrument used to assign thesecurity instrument to Freddie Mac. See Guide Section 18.1.

While "Seller/Servicer" refers to the entity primarily or exclusively sellingMortgages to, or servicing Mortgages for, Freddie Mac, we have tried touse either the term "Seller" or "Servicer" where that is more accurate.However, absent a Transfer of Servicing, the same entity may be bothSeller and Servicer, although you may be interacting with differentpersonnel. Using this convention should help clarify the different roles.

Throughout the Handbook, you and your refer to the DocumentCustodian.

Note file refers to the Document Custodians file and the documentsretained in that file pursuant to the Form 1035, Custodial Agreement.

Mortgage file refers to the Servicers file.

References to "Form 1034" may refer collectively to all versions or to a

specific version, as the context requires. Because the Handbook assumesthat Mortgages are delivered to Freddie Mac through the Selling System,most references will be to Form 1034E, the version of CustodialCertification Schedule used for Selling System deliveries. Form 1034B,Custodial Certification Schedule Balloon Loan Modification, is used inconjunction with Balloon/Reset Loan modifications. Form 1034S,Custodial Certification Schedule Summary, is a summary form of thehardcopy Form 1034 (fixed-rate mortgages) or 1034A(ARMs) that may

Freddie Mac Document Document Custody Procedures HandbookJanuary 2010 Preface

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contain a list of data corrections. Form 1034T, Subsequent TransferCustodial Certification Schedule, summarizes information for Mortgagestransferred in a Transfer or Servicing or transfer of custody.

Effective October 1, 2009, Freddie Mac no longer provides direct document

custodial services to Seller/Servicers. However, Freddie Mac will continue toperform oversight of document custody program requirements and overallmanagement of the certification processes and requirements. As such, allDocument Custodians will continue to submit to Freddie Mac the followingcompleted and executed forms, as applicable:

Form 1034B, Custodian Certification Schedule Balloon LoanModification, upon certifying the information contained in a Balloon LoanModification, in accordance with the requirements of Guide Section 83.103

In connection with the sale of Mortgages to Freddie Mac through

MIDANET, Forms 1034S,

Custodian Certification Schedule Summary, and1034SM, Custodian Certification Summary for Multiple PurchaseContracts, upon verifying the documents and performing the certificationsrequired in accordance with Guide Section 18.6

Form 1034T, Subsequent Transfer Custodial Certification Schedule, uponperforming the verifications and certifications in connection with a Transferof Servicing or transfer of custody

DCO will continue to:

Process requests for assistance with Mortgage discharges, satisfactions,and releases of lien or similar and other matters related to the chain of titlefor Mortgages owned by Freddie Mac when we are identified as the lienholder in the land records. Please use the Request for Assistance formfound on our web page at http://www.freddiemac.com/cim/docex.html.

Process MERS Transfer of Beneficial Rights and resolve issuesconcerning transactions affecting Freddie Mac on the MERS registrationsystem

Servicers may contract with Freddie Macs Designated Custodian instead ofcontracting with another Freddie Mac-approved Document Custodian. Except as

otherwise required by the context, references in this Handbook to DocumentCustodian include the Designated Custodian.

For information on certification and custody of mortgages originatedelectronically, please refer to Freddie Mac's eMortgage Guide, found on FreddieMacs website at


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http://www.freddiemac.com/singlefamily/elm/pdf/eMortgage_Guide.pdf . Selling,Servicing, and acting as Document Custodian for eMortgages for Freddie Macrequires special contract provisions.

We hope that you find this Handbook helpful, and we would like to hear from you

regarding any comments and questions that you have about your status as aFreddie Mac Document Custodian and the custodial duties and functions.


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Document Custodial Options andRequirements

Chapter

1

Contents

Topic Page

Overview 2

Document Custodians 2

Eligibility 3

Application and Approval Process 4

Annual Reporting 4

Terminating the Document CustodialRelationship

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Freddie Mac Document Document Custodial Options and RequirementsJanuary 2010 1 Chapter 1


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Document Custodial Options and Requirements


Overview

A Seller/Servicer selling Mortgages to Freddie Mac must ensure that the Notes,assignments, and related documents are delivered to you according to theFreddie Mac Single-Family Seller/Servicer Guide (Guide). This chapter

describes relationships, duties and responsibilities among the DocumentCustodian, the Seller/Servicer, and Freddie Mac for certifying and safeguardingour Notes.

The Designated Custodian has been qualified by Freddie Mac to be an approvedDocument Custodian with which Servicers may contract for custodial services.The Designated Custodian is referred to in this chapter only as a custodialoption. References to Document Custodian in this chapter are deemed toinclude the Designated Custodian as appropriate.

Document Custodians

Seller/Servicers must select either Freddie Macs Designated Custodian oranother Freddie Mac approved Document Custodian for the Mortgages soldand/or serviced for each Seller/Servicer number. See Guide Section 18.1.

The following chart identifies the general requirements for each Custodian option.

DocumentCustodian

Contract Requirements Document Requirements

DesignatedCustodian

Requires an executed Form1035DC, Designated

Custodial Agreement: Single-Family Mortgages

Seller sends Notes,supplemental documents and

Intervening Assignments to theDesignated Custodian.

Third-PartyDocumentCustodian

Requires approval fromFreddie Mac and an executedForm 1035, CustodialAgreement: Single-FamilyMortgages

Seller sends Notes,supplemental documents andIntervening Assignments to theThird-Party DocumentCustodian.

Self-Custodian Requires approval fromFreddie Mac and an executed

Form 1035, CustodialAgreement: Single-FamilyMortgages

Seller sends Notes,supplemental documents and

Intervening Assignments to itstrust department, which hastrust powers granted by itsprimary regulator.

Seller/Servicer and Document Custodian should enter into a written agreementregarding Document Custodian's charges and fees for document custodialservices (e.g., Note certification, storage, release and copying); however, theagreement may not contain terms that conflict with the Guide or this Handbook,
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Document Custodial Options and Requirementssuch as Freddie Mac's ability to gain access to the Notes without theSeller/Servicer's consent.

Compensation for custodial services is the sole responsibility of the Servicer.See Guide Section 18.1. A Document Custodian may not act in a manner thatmight adversely affect Freddie Mac or its interests, or fail to perform its custodialduties because of non-payment by a Seller/Servicer.

A Document Custodians vault will be assigned only one Document Custodiannumber, regardless of the number of Seller/Servicers relationships for which itholds Notes for Freddie Mac. Each relationship between a Seller/Servicer and athird-party or self-custodian requires a separate Document Custodial Agreement.Mortgages sold under a particular Seller/Servicer number will automatically beassociated with the Document Custodian that certifies the Note at delivery. ASeller/Servicer must have a separate Seller/Servicer number for each custodialrelationship. See Guide Sections 18.1(a) and 18.3.

Document Custodians with more than one vault will need a separate

Document Custodian number from Freddie Mac for each vault.

The agreements that govern the certification and safeguarding of Notes sold toFreddie Mac are the Custodial Agreement: Single-Family Mortgages (Form1035), a tri-party agreement between Freddie Mac, the Seller/Servicer, and theDocument Custodian, and the Designated Custodial Agreement: Single-FamilyMortgages (Form 1035DC), a tri-party agreement among Freddie Mac, theSeller/Servicer, and the Designated Custodian. By executing the Form 1035, theSeller/Servicer and the Document Custodian represent and warrant to each otherand to Freddie Mac that the Document Custodian satisfies our document custodyeligibility requirements, found in Form 1035, this Handbook and the Guide, asthey may be amended from time to time. See Form 1035 and Guide Section18.3 for more information. If a Document Custodian fails to maintain or complywith the eligibility requirements (see Guide Section 18.4), the Seller/Servicermust contact Freddie Macs Counterparty Credit Risk Management department(CCRM) immediately at:

Attn: Counterparty Credit Risk ManagementFreddie Mac1551 Park Run Drive, MS D3A

McLean, VA 22102-3110Phone: (571) 382-3434 Opt. 2Fax: (866) 743-0087

Eligibility

Basic Document Custodian eligibility requirements appear in Section 18.2of theGuide. An institution must meet the requirements found within Section 18.2 for

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Freddie Mac to approve it as a Document Custodian including, but not limited to,being a financial institution that is supervised and regulated; meeting FreddieMacs minimum net worth requirement; and performing the document custodyfunction in a trust department that is established and operated under trust powersgranted by the Document Custodians primary regulator. For additional

information on Document Custodian eligibility requirements, please refer toGuide Section 18.2.

Application and Approval Process

A Seller/Servicer electing to use a Document Custodian other than theDesignated Custodian must contact CCRM to apply for approval.

The applicant institution must contact CCRM for information on the applicationprocess and the required documentation. When the necessary documentation isreceived, CCRM will review it to determine whether to grant approval, and notifyboth the Seller/Servicer and applicant of its decision. See GuideSections 18.2

and 18.3 for eligibility criteria and further information.

We will send a copy of the fully executed Form 1035 to both the Seller/Servicerand Document Custodian for their records. See Guide Section 18.3. The SellerServicer must receive an original, fully executed Form 1035 from Freddie Macbefore the

Seller/Servicer delivers any documents to a Document Custodianpursuant to Guide Section 16.8, or

Document Custodian accepts any documents from a Seller/Servicer.

Annual Reporting

By March 31st

of each year, each Document Custodian must complete the AnnualDocument Custodian Eligibility Certification Report (Document Custodian annualreport) and submit it to CCRM. Custodians must also submit any otherinformation that Freddie Mac may request in conjunction with the Annual Reportor otherwise. See Form 1035.

Concurrent with submission of its Form 16SF, Annual Eligibility CertificationReport, to CCRM, Seller/Service r certifies its Do cument Custodian(s) ifapplicable, continues to meet all the Document Custodian eligibility requirements

stated in the Guide.

Seller/Servicers must also submit any other information thatFreddie Mac may request. See Form 1035 and Guide Section 4.9 for moreinformation.

Terminating the Custodial Relationship

Any party to a Form 1035may terminate it upon proper notice to the otherparties. Upon such notice, all Freddie Mac Notes must be transferred to a newapproved Document Custodian or the Designated Custodian within 30-days as
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described in Chapter 5 of this Handbook and GuideSection 18.7. The DocumentCustodian being terminated must fulfill the custodial duties until all Notes havebeen transferred to and recertified by the Transferee Document Custodian.

Freddie Mac may terminate any Document Custodial Agreement among FreddieMac, a Seller/Servicer and a Document Custodian in our sole discretion upon30days written notice.

Freddie Mac may terminate a Form 1035 immediately if

1. We modify our requirements for document custody,2. A Seller/Servicer:

Is suspended or disqualified, or Is unable to comply with our eligibility standards, or Performs unsatisfactorily

or

3. A Document Custodian, in Freddie Macs sole judgment:

Does not meet the eligibility requirements or criteria for custody, or Performs unsatisfactorily, or If any circumstance occurs or exists that might adversely affect the

Document Custodian or our Notes or assignments or the interests ofFreddie Mac.

See Guide Sections 18.1 and 18.7 and Section 6 of Form 1035 for moreinformation.

A Document Custodian may terminate the Form 1035 upon at least 30-dayswritten notice to the Seller/Servicer and to CCRM.

A Seller/Servicer may terminate a Form 1035 upon 30-days written notice to theDocument Custodian and to CCRM. The Seller/Servicer must then select a newDocument Custodian.
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Freddie Mac Document Duties and Responsibilities

Duties and Responsibilities

Chapter

2

Contents

Topic Page

Compliance and Controls 2

Changes to Institution Information 7

Insurance Coverage 8

January 2010 1 Chapter 2


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Freddie Mac Document Duties and ResponsibilitiesJanuary 2010 2 Chapter 2

Compliance and Controls

The Document Custodian must certify the Notes and assignments delivered by aSeller/Servicer and hold them in trust for us. Document Custodians must certifyand safeguard Notes and assignments as required by the Guide, Form 1035 andthis Handbook and adhere to the highest professional and ethical standards.

In order to protect Borrower privacy, Document Custodians must not releaseoriginal documents, copies of documents, or anyinformation about a Borrower ora Mortgage held in custody for Freddie Mac to anyone except Freddie Mac or theServicer, even if the person asking is the Borrower or someone claiming to bethe Borrower. If the person is claiming to be the Borrower, you should direct himor her to the current Servicer. Because of periodic reporting requirementsrelating to certain mortgage-backed securities, the Seller or a previous Servicerof a Mortgage may request loan-level information; you must direct all suchinquiries to the current Servicer. Please contact Document Custodial Operations(DCO) if you have any questions regarding Borrower privacy.

Pursuant to Form 1035, Freddie Mac may, with or without prior notice, performan on-site audit that relates to Notes and assignments held for Freddie Mac, onthe following:

All records and documents held by a Document Custodian,

The vault itself (facilities, security, etc.), and/or

The Document Custodians policies and procedures relating to thecustodial functions.
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The chart below identifies a number of compliance controls; this information isnot all-inclusive.

Custodial Functions Compliance Controls

Hold Notes and assignments in trust forthe sole benefit of Freddie Mac

Do not enter into any understanding,agreement or relationship with anyparty to obtain, retain or claim anyinterest, including ownership orsecurity, in Mortgages owned byFreddie Mac, unless specificallyapproved in writing, in advance by us

Maintain custody and control of theNotes and assignments

Track Notes held for Freddie Mac inaccordance with note trackingrequirements set forth in the Guide

and this Handbook Affix the Freddie Mac loan number

to the Note, if advised by theSeller/Servicer that Freddie Macrequires it

Physically segregate Freddie MacNotes from those held for otherinvestors, if advised by Freddie Macto do so

See Guide Sections 18.2 and 18.6 for

further information.

Certify Notes, supplemental documentsand assignments

See Chapter 3 of this Handbook fordetailed information

Release documents to Servicer See Chapter 4 of this Handbook fordetailed information

Release documents to TransfereeDocument Custodian

See Chapter 5 of this Handbook fordetailed information

If a Note cannot be found in the vault after the Document Custodian hasreceived and certified it, the Document Custodian should contact FreddieMac for instructions

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The chart below identifies the minimum standards for the Document Custodian tomaintain its eligibility as a Document Custodian and properly certify andsafeguard the Notes. See Guide Section 18.

Standard Activity or Requirement

Employ internal controls and useprudent business practices tosafeguard and maintain our Notesand assignments

Provide fire-resistant storage with aminimum of two hours protection. SeeGuide Section 18.2(b).

Provide fire extinguishers or other fireretardant equipment or devices invaults

Maintain a visitors log to be used foranyone who does not work in thebuilding

Require an escort for anyone whodoes not work in the building

Restrict access to the vault topersonnel with appropriate credentials,i.e. Secure ID, PIN, etc., or individualsescorted by personnel with appropriatecredentials

Ensure that staff is knowledgeable inhandling Notes and assignments,and performing other custodial

duties. See Guide Section 18.2(b)

Provide access to our reference materialsand publications, including:

The Guide (available on AllRegs)

This Handbook

The Document Custodial Operationswebsite:http://www.freddiemac.com/service/cim/

Bulletins and Industry Letters

Self-Custodians must ensure thatdocument custody functions areseparate from Mortgage origination,selling, or servicing. See Guide

Section 18.2(c), (d) and (e)

The document custody department andstaff must be independently andseparately managed from any functionalarea that performs Mortgage origination,

selling, or servicing, and must maintainseparate records, files and operations
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Standard Activity or Requirement

Develop and maintain anindependent document tracking and

reporting system to monitor Notesand assignments, to track Notereleases and returns, and to identifyphysical location of Notes. SeeGuide Section 18.2(b)

Include the Freddie Mac loan number inthe note tracking system. The

Document Custodian must referencethe Freddie Mac loan number on allcorrespondence and related documents

If the Freddie Mac loan numberbegins with a 0, the 0 must beincluded in your note trackingsystem.

Include the Servicers loan number inthe system

Cross-reference the Freddie Mac loannumber for each Mortgage with theServicers loan number

Document Custodians must ensure thattheir note tracking system is separateand independent of the Servicerssystems.

Periodically, you will be required toprovide an electronic list of theFreddie Mac loan numbers for all

Notes you hold. You will be providedwith details concerning file formatand where to send the file. Pleaseensure that the complete 9-digit loannumber is provided, including anypreceding zeros, to avoid having thatloan flagged as an invalid loannumber

We do not use the contract numberafter funding. The Freddie Mac loannumber tracks subsequent loantransactions, including Transfers ofServicing

Maintain and regularly updatewritten procedures. See GuideSection 18.2(b)

Compare your procedures to thisHandbook, the Guide and Form 1035toensure that they meet our requirements

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Activity Requirement

Maintain a disaster recovery(business continuity) plan. See

Guide Section 18.2(b)

Your plan must include:

Immediate (within 24 hours) notice to

DCO if your facility is affected by adisaster,

Email address:[email protected]

Phone number: (703) 724-3000

Fax number: (703) 738-2141

A process for physicalrecovery/restoration of documents,

Plans to recover tracking system data,

including electronically maintainedinformation,

Relocation/restoration of facilities toensure ability to perform custodialfunctions, and

Periodic testing and updating of theplan

Submit Annual Document Custodian

Eligibility Certification Report. SeeForm 1035

In order to maintain eligibility, submit the

Annual Document Custodian EligibilityCertification Report by March 31st eachyear

Refer to our website:www.freddiemac.com/service/cim/docs/dcelig cert report.doc

or contact:[email protected]

Terminate custodial relationship withServicer

See Chapter 1 of this Handbook for furtherinformation

As Document Custodian, youare responsible for ensuring asmooth transfer of all Notes,assignments and supplementaldocuments.

http://www.allregs.com/ao/main.aspx?did2=8aad107040ac49efac6549080800a682mailto:[email protected]://freddiemac.com/cim/pdf/Form1035.pdfhttp://www.freddiemac.com/service/cim/docs/dc%20elig%20cert%20report.dochttp://www.freddiemac.com/service/cim/docs/dc%20elig%20cert%20report.docmailto:[email protected]:[email protected]://www.freddiemac.com/service/cim/docs/dc%20elig%20cert%20report.dochttp://www.freddiemac.com/service/cim/docs/dc%20elig%20cert%20report.dochttp://freddiemac.com/cim/pdf/Form1035.pdfmailto:[email protected]://www.allregs.com/ao/main.aspx?did2=8aad107040ac49efac6549080800a682


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Changes to Institution Information

To ensure that Freddie Macs records for Document Custodians are accurate,Document Custodians must notify Freddie Mac, as set forth below, of aninstitution name or address change for the vault, changes in the vault contactperson or institutional organizational changes, such as mergers orconsolidations.

Event Description

Document Custodianaddress change

Certain changes will necessitate a new Form 1035.For instance, if you move Notes held for one or moreServicers to a new vault, but will continue to maintainthe Notes for other Servicers at the old vault, you willneed an additional Document Custodian number andForm 1035 that documents the relationship between

your new vault and the particular Seller/Servicernumbers supported there

Moving Notes (except pursuant to a Form1036, Request for Release of Documents)requires prior approval by Freddie Mac.

All Freddie Mac Notes associated with aparticular Seller/Servicer number must beheld in the same Document Custodianvault, or with the Designated Custodian

Each Document Custodian location musthave a unique Freddie Mac-assignedDocument Custodian number

Provide written notification to:Changes in DocumentCustodian name,organization, eligibilitycontact name, e-mailaddress, and phone number

Freddie Mac CCRM1551 Park Run Drive, MS D3AMcLean, VA 22102-3310

Provide written notification to:Document Custodianoperational contact namechange and DocumentCustodian name change

Freddie Mac DCO8250 Jones Branch Drive, MS A2DMcLean, VA 22102

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Insurance Coverage

Document Custodians must maintain the following insurance coverage, at aminimum:

Errors and Omissions Insurance covering claims resulting from theDocument Custodians breach of duty, neglect, errors and omissions,misstatement, misleading statements or other wrongful acts committed inthe conduct of document custodial services.

Financial institution bond or equivalent insurance covering any lossresulting from employee dishonesty, physical damage or destruction to, orloss of any Notes or assignments while these documents are located onthe Document Custodians premises.

Transit Insurance: Notes that move between Document Custodians orfrom one Document Custodian's vault to another must be covered by

transit insurance. If Custodian and Seller/Servicer agree in writing that theDocument Custodian will assume liability for the Notes during the move,then Document Custodian must maintain insurance that covers physicaldamage to and destruction or loss of the Notes. If there is no writtenagreement allocating liability, then the Seller/Servicer is liable for theNotes and must obtain insurance as described in Guide Section 18.4(c).

For additional information, see Guide Sections 18.2 and 18.4.
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Freddie Mac Document Document Delivery and Processing Procedures

Document Delivery and ProcessingProcedures

C

hapter

3Contents

Topic Page

Background 2

Documentation to be Verified 3

Verification Requirements 3

Data Verification 4

Note Verification 11

Borrowers Signature 11

Uniform Instruments 15

Lost Note Affidavits 15

Endorsements 16

Assignments 19

Reviewing Supplemental Documentation 21

Resolving Discrepancies 23

Post-Certification Corrections to Notes 23

Retention Period 23

New York Consolidation, Extension andModification Agreements (NY CEMAs)

23

MERS-Registered Mortgages 25



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Document Delivery and Processing Procedures

Freddie Mac Document Document Delivery and Processing ProceduresJanuary 2010 2 Chapter 3

Background

Document Custodians are responsible for verifying certain information containedin the Notes and related documents for the Mortgages sold to Freddie Mac andfor certifying that you have performed those verifications and that the original

documents are in your possession. We refer to this process as certification orcertifying the Notes.

This chapter details our requirements for certifying Notes being sold to FreddieMac, including those sold with a Concurrent Transfer of Servicing. Forinformation on Subsequent Transfers of Servicing, see Section 56 of the Guideand Chapter 5 of this Handbook. Unless the Document Custodian receives acopy of the Purchase Documents between the Seller/Servicer and Freddie Mac,including the first page with the Seller/Servicer number, the pages with theexceptions detailed, and the signature pages, the Document Custodian must notdeviate from the requirements of this Handbook or the Guide.

The process for certifying Mortgages sold to Freddie Mac through the SellingSystem can be found in this chapter. The process for certifying Notes sold toFreddie Mac through MIDANET is described in Chapter 3A. Except asspecifically noted in Chapter 3A, all of the requirements to certify Notes soldthrough the Selling System also apply to Notes sold through MIDANET.

The information in this chapter is intended to help you fulfill your responsibilitiesas an approved Document Custodian. This Handbook is a reference tool, thatcomplements Freddie Macs Single-Family Seller/Servicer Guide(the Guide). Itdoes not replace the requirements in the Guide, and in the event of a conflict, the

Guide controls.

Before you may accept a delivery of Notes from a Seller, Freddie Mac mustapprove you as a Document Custodian for the Servicer that will service theMortgages. Refer to Chapter 1 of this Handbook for additional information onbecoming an approved Document Custodian.

Sellers may use independent delivery agents, particularly for bulk or seasonedloan portfolio sales through MIDANET. If such an agent contacts you or youreceive loan data with respect to the Mortgages from a third party, you must askto see written evidence of its relationship with the Seller, such as a copy of thefirst and signature pages of their contract with the Seller or the paragraph in the

Freddie Mac Master Commitment that recognizes the agency arrangement. Youmay rely on the representations of such an agent as if the Seller made them, asthe Seller remains liable for the accuracy and completeness of all data. ContactDocument Custodial Operations (DCO) if you have any questions regardingdelivery by an agent.
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Documentation to be Verified

The Seller must deliver to you, as the approved Document Custodian, the Note,the assignments, and the related documentation for each Mortgage it is selling toFreddie Mac. The Form 1034E or Note Delivery Cover Sheet will accompany

each delivery of Notes.

You may also receive documents that provide additionalNote terms, clarify legal terms, and/or complete the required documentation for aparticular Mortgage.

Examples of these supplemental documents include

Addendum to the Note

Agreement to Convert

Assumption Agreement

Modification Agreement

Power of Attorney

Name Affidavit

Signature Affidavit

An Allonge, because it is physically a part of the Note, is not technically asupplemental document, and if endorsements are made on the Allonge, theymust be delivered as part of the Note.

Verification Requirements

Upon receipt of a delivery of Notes from the Seller, you must

Verify the data. The information on each Note must match thecorresponding information in the Selling System or applicable Form 1034.

Verify the Note. The Note must be original and complete. The Note mustalso be originated on a Fannie Mae/Freddie Mac, a Freddie Mac, or aFannie Mae Uniform Instrument. Seehttp://www.freddiemac.com/uniform/for a complete list of current UniformInstruments.

Verify the chain of endorsements (Note).

Verify the chain of assignments (security instrument).Once you have verified the accuracy of the data and that the documents complywith our requirements, you may certify the loan. Certification is complete in theSelling System when you

Indicate in the Selling System that you have certified individual loans orloans in batch; or


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Document Delivery and Processing Procedures Have submitted proposed data corrections to the Seller, and the Seller

accepts the proposed changes.

Data Verification

The table below lists the data elements requiring verification for all Notes. You

must compare these data elements in the Selling System to the informationcontained on each applicable Note. For additional information on these dataelements, particularly as they relate to special delivery requirements for certainMortgage Products, see Form 11 and Form 13SF.

Freddie Mac systems and publications are not always consistent in theirterminology. In the table below, we list the various terms for the same dataelements in the following order: Selling System (Form 1034E), Forms 11and 13SF, and MIDANET (Form 1034)

The parenthetical numbers in the data elements column correspond to the

numbered boxes on Job Aids 1-5

Freddie Mac no longer requires that the Freddie Mac loan number beaffixed to the face of the Note, in most circumstances. See Guide Sections16.4(e) and 18.6(a)

Alternative Document Custodian Verification ProcessFor Mortgages with respect to which Seller submits the Notes and assignmentsto the Custodian prior to receiving the Form 1034 and associated electronic datathat will be provided to Freddie Mac, the alternative verification processdescribed below will be deemed to satisfy the certification requirements:

(A) Prior to delivering a Note to the Document Custodian, Seller captures allNote information that the Document Custodian is required to certify andtransmits such data (Seller's loan data) electronically to the DocumentCustodian;

(B) Upon receiving a Note, the Document Custodian must independentlyverify that the information on the Note matches Seller's loan data;

(C) Upon receipt of the Form 1034 and the data delivery in the SellingSystem, the Document Custodian must conduct an electronic comparison

of Seller's loan data previously verified by the Document Custodian, to theSelling System data (except that the Custodian is not required to verify theSeller/Servicer loan number) and, on the basis of such comparison, theCustodian must notify the Seller of any issues and enter the appropriatecertification status in the Selling System to complete the certification, onceany issues are resolved;

(D) Seller must provide to the Document Custodian, in writing, a statementthat its data retention system accurately captures and records all Note

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Document Delivery and Processing Proceduresinformation required to execute the verification process required for notecertification;

(E) The Document Custodian must have computer and other systems in placeto ensure that:

(i) The Seller's loan data includes all the data fields that are includedin the Form 1034 and the Selling System; and

(ii) The Seller's loan data as of the Delivery Date is the same as theForm 1034 and the Selling System data used to certify the Mortgage;

Data Elements Compare to Note

Freddie Mac loannumber (1)

Nine-digit loan number, provided to the Seller by FreddieMac (must appear in the upper right-hand corner of each

Note, if required). If the Freddie Mac loan number is onthe Note, it must be verified

Note date (2)

Date of Note (Forms11, 13SF, and 1034)

The original Note Date that appears on the first page ofthe Note

If there is a discrepancy, contact the Seller.

For additional information relating to converted,modified, construction, or similar Mortgages, see theinstructions in Form 11.

Property street (3) Street address for the Mortgaged Premises as indicatedon the Note mayinclude

Street type (e.g., Circle; Court; Avenue; Road;Boulevard),

Unit number, if applicable, and

Direction, if applicable (e.g., 123 East Main Street,1000 Connecticut Avenue, NW).

Standard or obvious abbreviations for street type and

direction are acceptable

Misspelled street designations are acceptable,provided that the intended word is still apparent. Forexample:

"Road" spelled as "Raod";

"Street" spelled as "Streeet"; or

"Circle" spelled as Cricle

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For certain Mortgages, such as Construction toPermanent Mortgages, the street address on the

Note may not be complete. Enter the discrepancy inthe Selling System, and contact the Seller fordocumentation confirming the street address to certifythe Note

Property city (4) City or town in which the Mortgaged Premises is locatedindicated on the Note

Property state (5) State in which the Mortgaged Premises is locatedindicated on the Note

Property zip code (6) Postal Zip Code of the Mortgaged Premises indicated onthe Note

Zip Codes sometimes change. If a Zip Code has beenaltered on the Note, it is not necessary for theBorrower to initial that change. If the Zip Codedelivered in the Selling System does not match theZip Code on the Note, you may certify the Note if theU.S. Postal Service website(http://zip4.usps.com/zip4/welcome.jsp ) confirms thatthe Zip Code delivered in the system is correct for the

property address. We recommend keeping a print outof the web page in the file

Original LoanAmount (7)

(Forms 11 and13SF)

Original principal amount indicated on the Note. ForMortgages that have been modified or converted prior todelivery, the loan amount as of the modification orconversion. Our systems do not permit delivery of cents inthis field. Sellers are instructed to omit cents and you arepermitted to certify if the loan amount variance is less thanone dollar

Original InterestRate (8)

Note Interest Rate(Forms 11 and13SF)

The original interest rate indicated on the Note

Original P&IPayment Date (9)

The Due Date of the first full principal and interest (P&I)payment indicated on the Note

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Date of First P&IPayment (Forms 11and 13SF)

For Mortgages that have been modified or converted priorto delivery, the due date of the first full P&I payment of themodified Mortgage as indicated in the modification or

conversion agreement

For Initial Interest Mortgages, the due date of the firstmonthly interest-only payment indicated on the Note

Original MaturityDate (10)

Note Maturity Date(Forms 11 and13SF)

The date of the final P&I payment indicated on the Note

Original P&IPayment (11)

Monthly P&IPayment (Forms 11and 13SF)

The full monthly principal and interest (P&I) paymentindicated on the Note

For modified or converted Mortgages, the monthly P&Ipayment in effect after the modification or conversion asspecified in the modification or conversion agreement

For Initial Interest Mortgages, the amount of the firstinterest-only payment specified in the Initial Interest Note

Borrower name (12) First name, middle name or initial, and last name of the

first Borrower indicated on the Note

Co-Borrower name(13)

First name, middle name or initial, and last name of Co-Borrower indicated on the Note

Modification/Conversion date (24)

Mod/Conv Date(Forms 11 and13SF)

For modified or converted Mortgages, the date on whichthe modification or conversion was effective

For one closing construction to permanent Mortgages, thedue date of the first P&I payment of the permanentMortgage

For Construction Conversion and Renovation Mortgagesusing Integrated Documentation, the Due Date of the firstprincipal and interest payment of the PermanentFinancing.

For Initial Interest Mortgages, the Due Date of the firstmonthly fully amortizing P&I payment as stated in the Note
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If you have difficulty identifying a Mortgage as one of the types mentionedabove, contact the Seller for additional information

You must verify the six-digit Seller/Servicer number; this enables you totrack the Notes properly through your tracking system, and to verify that you

have a Form 1035 with that Seller/Servicer

In addition to the data elements in the table above, you must also verify the followingdata elements for all ARMs.


Convertible (23) Indicates whether the ARM has a feature that allowsthe adjustable interest rate to convert to a fixed rate.If the ARM is a Convertible ARM, the option toconvert will be stated on the Note

First rate adjustment date(14)

The First Change Date indicated on the Note

Index Source (15) The source of the fluctuating economic indicatorspecified in the Note, the value of which isused to adjust the Note Rate periodically.See GuideExhibit 30.

Because all Notes in a single PC pool musthave the same Index Source, Sellers may

experience a fail after you have certified aNote

Index Lookback Days (16) The number of days between the Interest ChangeDate and the date the Index value is determined.Expressed in the Note as the number of days beforethe Interest Change Date

For most ARMs, the number of days indicatedin the Note will be 45. For certain ARMs thathave a First Business Day (FBD) of the monthimmediately preceding the month in which theInterest Change Date occurs, the number ofdays is 25

Because all Notes in a single PC pool musthave the same Index Lookback Days, Sellersmay experience a fail after you have certified

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a Note

Note margin (17) Percentage added to the Index value to determinethe new interest rate (Note Rate) on eachadjustment date. The mortgage margin is indicatedon the Note

Interest Rate Rounded (18) The percentage to which the interest rate (NoteRate) will be rounded on each Interest Date. Thisamount will be .125% for all ARMs, unless anotherpercentage or calculation is authorized in thePurchase Documents

1st Rate Adjustment maxrate (19)

The maximum interest rate (Note Rate) to which anARM may adjust at the First Change Date.

Expressed as a percentage in the Note (may needto be calculated).

1st Rate Adjustment minrate (20)

The minimum interest rate (Note Rate) to which anARM may adjust at the First Change Date.Expressed as a percentage in the Note (may needto be calculated)

Periodic Interest Rate Cap(21)

The maximum increase or decrease in the interestrate (Note Rate) on any Interest Change Date after

the first Interest Change Date. Expressed as apercentage in the Note

Life-of-loan max rate (22) The maximum interest rate (Note Rate) to which anARM may adjust over the life of the loan. Expressedas a percentage in the Note

If you discover discrepancies between any of the data elements in the SellingSystem and the Note for a given Mortgage, you must not certify it. You mustenter the data discrepancy in the Selling System or, if you and the Seller agree,you may use an alternate method to report discrepancies, even though

references through this chapter direct you to enter the discrepancy in the SellingSystem.

If you have proposed changes, the Seller may receive an email notice, or theSeller may monitor outstanding certification issues through the Selling System.The Seller may accept or reject the proposed changes. If the Seller


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Accepts all proposed changes and there are no document discrepanciesoutstanding, the Note will be automatically certified. You need not performany further action to complete the certification.

Rejects any of the proposed changes or documentation discrepancies,you must work with the Seller to resolve the issues.

Issue Resolution

Borrower Name in theSelling System differs fromNote

Enter the discrepancy in the Selling System. TheSeller must send you evidence of a name change ora Name Affidavit

NOTE: See Borrowers Signature section onpages 11-13 for further information concerningallowable variances

Note data elements do notagree with the data in theSelling System

Enter the proposed changes to the data in theSelling System. The Seller must either

Accept your changes, in which case nofurther action on your part is necessary; or

Reject your changes. You may not certifythe Note unless the Seller provides you withcorrected documentation

Changes on Note; white-outs and cross-outs are

not initialed by Borrowers

Enter the discrepancy in the Selling System andreturn Note to the Seller to have the Borrower initial

all changes

Changes to Freddie Mac loan number, closinglocation, typed name under signature and Zip Codedo not require Borrowers initials

Freddie Mac loan numberis changed on the Note

No action is required, provided that the Freddie Macloan number that appears on the Note matches theFreddie Mac loan number in the Selling System

FHA case number is

changed or incorrect onthe Note

No action required. This is not a certified field

Refer to Section 2 of the Certifying Mortgages for Freddie Mac manual for theprocess for entering proposed data changes(http://www.freddiemac.com/learn/pdfs/deliver/ss_certmort.pdf ).
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Note Verification

The Note must be original and complete. Freddie Mac will not accept Notesmarked as duplicate original, corrected copy, or similar, even if there isan original signature, or if the words duplicate original or corrected copy are

crossed through with or without initials. Please contact DCO immediately if youreceive such a Note.

A Sellers Purchase Documents may permit certain variances from requirements,such as original Notes or Uniform Instruments. You must receive a copy of therelevant portion of the Sellers Purchase Documents that waive or supplementour standard Guide requirements before you may certify the Note.

Borrowers Signature

You must verify that the signature on the Note for each Borrower is an original

ink signature. Signatures in pencil are not acceptable. Stamped or other non-traditional methods of signing may be acceptable in certain circumstances, suchas the Borrowers physical impairment. In these cases, a Signature Affidavit orsupporting documentation, such as a court order, is required.

There is no requirement that the Borrowers name be typed or printedunder the signature line of the Note. However, the name as signed must notconflict with the Borrowers - as typed or printed name under the signature. If theBorrowers name on the Note does not match the data in the Selling System, itmust be treated as oversigned or undersigned as described below.

If a Borrower initials one page of the Note, then those initials must appear onevery page except the signature page. While there is no requirement that theBorrower initial the Note, you may not certify a Note where some pages of theNote are initialed and others are not.

Oversigning or Undersigning Documents

Borrowers may oversign or undersign their name.

Oversigning occurs when something is included in the Borrowerssignature that does not appear in the typed or printed name on the Noteand/or in the Selling System.

Undersigning occurs when the Borrowers signature does not containelements such as a middle name or initial that is included in the typed orprinted name on the Note and/or in the Selling System.

Oversigning and undersigning are acceptable and do not require a NameAffidavit or Signature Affidavit provided there is no conflict between the signedname and a typed or printed name on the Note and/or in the Selling System.


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You may encounter the following situations:

Acceptable Unacceptable

Signature John Q. Public Signature John Z. Public

Typed Name John Quincy Public Typed Name John Quincy Public

Signature is undersigned, but does not conflict with thetyped name

Signature conflicts with typed name. This is acceptable only if asignature affidavit is provided showing that John Quincy Publicsigns documents as John Z. Public.


Signature John Public Signature John Q. Public

Typed Name John Quincy Public Typed Name John Quincy Public, Trustee

Signature is undersigned, but does not conflict with thetyped name.

For a Borrower that is a living trust (may also be referred to as ainter vivos trust or revocable trust), the signatures of both thesettlor and the trustee must appear on the Note. See signatureby trustee below.


Signature John Quincy Public Signature John Quinn Public

Typed Name John Q. Public Typed Name John Quincy Public

Signature is oversigned, but does not conflict with thetyped name

Signature conflicts with typed name. This is acceptable only if aSignature Affidavit is provided showing that John Quincy Publicsigns documents as John Quinn Public.

Illegible Signature and Signature Contradictions

A Signature Affidavit or Name Affidavit is required when the Borrowers signaturecontradicts or is not consistent with a typed or printed name below the signatureline on the Note or in the Selling System. We prefer a notarized original Affidavit,however, a copy is acceptable.

If a Signature Affidavit is used, the signature on the Affidavit must closelyresemble the signature on the Note.

A Borrowers illegible signature is acceptable if the typed or printed name on theNote and the Borrowers name in the Selling System match.

When the Borrowers signature is illegible and there is no typed or printed nameon the Note, enter this as a document discrepancy in the Selling System. You willneed to obtain copies of other legal documents, such as the Name Affidavit or

Signature Affidavit, that contain the Borrower name and signature, to compare. Ifthey closely resemble each other, the signature is acceptable.


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May be Acceptable May be Acceptable

SignatureTyped Name

XJohn Quincy Public

SignatureTyped Name

John Quincy Public

A Signature Affidavit or Name Affidavit must accompany

this delivery, showing that John Q. Publics legalsignature is X.

A Signature Affidavit or Name Affidavit must accompany this

delivery, showing that John Q. Publics legal signature is .

May be Acceptable May be Acceptable

Signature is illegible andname is NOT typed undersignature

Signature is illegible

Typed Name John Quincy Public

Compare the signature to the signature on a SignatureAffidavit or other legal, notarized document and matchthe typed name on that document to the name in theSelling System

Acceptable if the typed or printed name on Note matches theBorrower name in the Selling System

Signature by a TrusteeIf a Note is secured by a Mortgaged Premises held in a living trust (inter vivos orrevocable), the Note must be signed by the Borrower as Settlor and by theTrustee on behalf of the trust; the same person may sign in each role, or differentpeople may sign. See GuideSection 22.10(a). The Note must clearly indicatethe name of the trust on the signature page.

With respect to living trusts, the Settlor is the person who contributes theproperty to the trust, who may also be referred to as the Grantor

Acceptable Acceptable

Signature

Typed Name

John Q. PublicJohn Quincy Public, Settlor and Trusteeof the John Quincy Public Trust

SignatureTyped Name

SignatureTyped Name

John Q. PublicJohn Quincy Public

John Q. PublicJohn Quincy Public, Trustee of the John Quincy

Public Trust

One signature used to indicate that the signatory isexecuting the document as settlor and as trustee.

Borrower executed the Note with one signature as settlor plus asecond signature as trustee.

Signature by a Conservator or Guardian

A conservator is someone who has been given authority over the affairs of anindividual deemed to be legally incompetent. If a conservator signs a Note asBorrower, then a copy of the court document that appoints that person asconservator for the Borrower must be included with the Note.

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Power of Attorney

If the Note is executed on behalf of the Borrower by an attorney-in-fact pursuantto a Power of Attorney (POA), it must be clear that the Note has been signed byan attorney-in-fact. You must verify that the POA is dated on or before the Note

Date.

The Seller must deliver the original notarized POA. The Document Custodian isnot expected to review the content of the POA. See Guide Section 16.5 foradditional information.

A general POA may be used by the signatory to execute the Note if that ispermitted under the law of the State in which the Mortgaged Premises islocated

Freddie Mac requires that a POA be notarized even if state law or local customsdo not.

Acceptable May be Acceptable

Signature

Typed Name

Samuel Signatory,Attorney-in-Fact for John

Quincy PublicJohn Quincy Public

SignatureTyped Name

Samuel SignatoryJohn Quincy Public

The signature indicates that Samuel Signatory isexecuting the document under a POA from John QuincyPublic.

The POA designating Samuel Signatory as John QuincyPublics Attorney-In-Fact for execution of Mortgagedocuments that is in effect on the date the documentswere signed must be received and attached to the Note.

This is not acceptable if the Note is received with no additionaldocumentation.

Seller must provide documentation to support Samuel Signatorysauthority to execute the Note on the Borrowers behalf.

This manner of signature is not a preferredmethod of executing a document under a POA,since it is not clear why or under what authoritySamuel Signatory is executing the document.

Freddie Mac will accept a POA that is notarized by a military officer if thenotarization is made pursuant to the Servicemembers Civil Relief Act 506(b),which permits a service member during a period of military service to make anaffidavit before any superior commissioned officer. See also Guide Section82.1.

If the original POA is missing:

A copy is acceptable if the original POA has been sent to the recordersoffice or the copy contains recordation information.

You must notify the Seller/Servicer if the original POA is missing for Notesin a Subsequent Transfer of Servicing.

See Guide Section 16.5.

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Uniform Instruments

The Guide requires that all Notes be executed on the Uniform Instruments (1-4Family) for the jurisdiction where the Mortgaged Premises are located. FreddieMac does not expect Document Custodians to conduct further verification

regarding the printed or standard text of the Note if the agency tagline indicatinga Uniform Instrument is present. See Guide Section 6.7; the Forms are listed inExhibit 4 Single-Family Uniform Instruments, and at www.FreddieMac.com.

The following apply to ensure that the Note(s) meet the Uniform Instrumentsrequirement.

The agency identifier tagline must appear on each page of the Note; aNote without the agency tagline will be considered non-standard.

Unless specified in the Purchase Documents, the Document Custodianmay not certify a Note that is not executed on a Uniform Instrument. TheSeller must be contacted and the Note returned.

Sellers may reprint Uniform Instruments on their own letterhead, bycomputer, or otherwise as they choose. However, the text of the UniformInstruments must remain unchanged and the tagline identifying theinstrument as a Uniform Instrument must remain a part of the documenteither Fannie Mae/Freddie Mac, Freddie Mac or Fannie Mae.

We do not object to supplemental tag line information by forms companiesor the lender; however, the original verbiage in the tag line of the UniformInstrument may not be changed.

Form numbers do not change when Guide Exhibit 4 is updated. As new generations of instruments are developed, and electronic format

replaces hard copy forms, Freddie Mac may explore new methods ofdenoting legally required changes in the Uniform Instrument form number.

The Spanish translations of certain Uniform Instruments that are availableon Freddie Mac's website are for borrower education and reference onlyand are not acceptable as original, signed mortgage documents. They maybe found at http://www.freddiemac.com/uniform/spanish.html

Lost Note Affidavits

In certain instances, you may receive a Lost Note Affidavit (LNA) instead of theoriginal Note. If the LNA meets these requirements, you may verify loan data onthe Note copy attached to the LNA. The LNA must be filed in the Note file in lieuof the Note.

The LNA must be an original, signed in ink by an officer of the Seller.

The LNA must be notarized.

http://www.allregs.com/ao/main.aspx?did2=15a91f94211840aa8f83e5c46675a135http://www.allregs.com/ao/main.aspx?did2=c8c23c9702584c9aa9a3a33d84a18396http://../Documents%20and%20Settings/f222915/Local%20Settings/Temp/notes6030C8/www.FreddieMac.comhttp://www.allregs.com/ao/main.aspx?did2=c8c23c9702584c9aa9a3a33d84a18396http://www.freddiemac.com/uniform/spanish.htmlhttp://www.freddiemac.com/uniform/spanish.htmlhttp://www.allregs.com/ao/main.aspx?did2=c8c23c9702584c9aa9a3a33d84a18396http://../Documents%20and%20Settings/f222915/Local%20Settings/Temp/notes6030C8/www.FreddieMac.comhttp://www.allregs.com/ao/main.aspx?did2=c8c23c9702584c9aa9a3a33d84a18396http://www.allregs.com/ao/main.aspx?did2=15a91f94211840aa8f83e5c46675a135


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Document Delivery and Processing Procedures The LNA must be addressed to Freddie Mac or state that it may be relied

upon by successors in interest, assignees, purchasers, etc. of the entity towhich it is addressed.

The LNA must include:

o The name of each Borrower on the Note,

o The original principal amount of the Note, and

o The Note Date.

A complete copy of the entire missing Note must be attached to the LNA,including all required signatures and endorsements complete to the Seller.

The Seller must provide you with evidence that Freddie Mac has approveddelivery of an LNA. This may include a copy of the portion of thePurchase Documents between Freddie Mac and the Seller that identifiesspecific Mortgages. If there is a specific mortgage list, the DocumentCustodian must ensure that each LNA received is included on that list. If

the Seller submits other written documentation, it must indicate thatFreddie Mac has approved the LNAs and list the affected Mortgages.

If the LNA meets these requirements, you must verify the loan data from the Notecopy attached to the LNA. The LNA and Note copy must be filed in the Note filein lieu of the Note.

If the copy of the Note does not include the complete endorsement chain,the LNA must contain a statement to the effect that the photocopy of theNote was made in the ordinary course of business prior to the Notesendorsement. Original endorsements on the Note copy are not acceptable

Endorsements

When a Note is sold to Freddie Mac, the Seller must endorse the Note in blankPay to the order of ., Please contact DCO if you receive an endorsement inanother form or with alternate language. While you may certify a Note endorsedPayable to , we will ask the Seller to change their practice for the future. Thefollowing must be clearly typed or printed:

The name of the institution making the endorsement (Seller-endorser)

The name and title of the individual authorized to sign.

Document Custodians cannot act as Attorney-in-Fact, Agent or Delegateeto endorse Notes for the Seller

If the endorser is doing business as, it must provide both the formalcorporate name and the dba name

Endorsements must be complete from the payee on the Note to the Sellerof the Mortgage to Freddie Mac. There may not be further endorsements aslong as Freddie Mac owns the Mortgage



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Document Delivery and Processing ProceduresThe following are examples of blank endorsements:

Without Recourse

PAY TO THE ORDER OF (Leave Blank)

WITHOUT RECOURSE

(Name of Seller-endorser)(Signature of duly authorized officer)(Typed name and title of signatory)

With Recourse

PAY TO THE ORDER OF _______(Leave Blank)

_____(Name of Seller-endorser)

(Signature of duly authorized officer)(Typed name and title of signatory)

Most Notes are sold to Freddie Mac without recourse; however, DocumentCustodians are not required to check recourse status of the Notes and haveno way of doing so

Allonges

Allonges are often used to provide additional space for endorsements. You maycertify a Note that has an Allonge attached if

The Allonge is p

Freddie Mac Document Custody Procedures Handbook

Documents

Transcript of Freddie Mac Document Custody Procedures Handbook