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Definitions

OverviewThe following terms are defined as they apply to Freddie Mac’s Seller/Servicer approval process.

Concurrent
Transfer of
Servicing

A Concurrent Transfer of Servicing means Servicing is transferred at the same time Freddie Mac purchases the transferring Mortgages.
Correspondent An entity that typically sells the Mortgages it originates to other lenders. The Correspondent performs some or all of the loan processing functions, such as taking the loan application, ordering credit reports, appraisals and title reports; and verifying the borrower's income and employment. The Correspondent may or may not have delegated underwriting and typically funds the loans at settlement. The Mortgage is closed in the Correspondent's name and the Correspondent may or may not service the Mortgage. The Correspondent could commission a Mortgage Broker to perform some of the processing functions.

DelinquencyDelinquency occurs when all or part of the borrower's monthly installment of principal, interest and, where applicable, escrow is unpaid after the due date. A delinquency that remains unresolved as of the close of business of the last working day before the next payment due date is considered a delinquency of one payment or 30 days, regardless of the actual number of calendar days since the initial due date. A delinquency that has been unresolved for 30 days or more but less than 60 days by the end of the reporting month must be reported as a one-payment or 30-day delinquency.

Early Payment
Default
A loan that experiences a 90-day delinquency during the first 12 months after the delivery date and the delinquency results in the initiation of foreclosure action.

Errors and
Omissions
Insurance
A liability insurance coverage for loss caused by errors, omissions, and negligence committed by persons covered by the policy in the usual activities of a lender. Fraudulent behavior is not included.

Freddie Mac
Exclusionary
List
The list compiled, maintained and distributed by Freddie Mac containing names and other information concerning persons or entities that are excluded or suspended from participating in transactions or doing business with Freddie Mac, either directly or indirectly or as a principal.

Fidelity
Insurance
A liability insurance policy that covers loss caused by theft, dishonest and/or fraudulent acts committed by specified persons such as officers and employees.

Home MortgageA mortgage secured by a first lien on real estate on which there is located a structure designed principally for residential use by one to four families.

Investment
Quality Mortgage
A loan that is made to a borrower from whom timely repayment of the debt can be expected and that is adequately secured by real property, all in accordance with Freddie Mac's purchase standards.

Managing
Executives
Chief executive officer, chief operating officer, chief financial officer, or the equivalent of each of these positions

Mortgage
Broker
A person or entity that specializes in loan originations, receiving a commission to match borrowers and lenders. The Mortgage Broker performs some or most of the loan processing functions, such as taking loan applications, or ordering credit reports, appraisals and title reports. Typically, the Mortgage Broker does not underwrite or service the loan and generally does not use its own funds for closing. The Mortgage is generally closed in the name of the lender that commissioned the broker's services.

Mortgage
Service
Provider
An entity or individual engaged to handle or perform, for a Seller or Correspondent, part of the mortgage application processing, underwriting, funding or postclosing functions, but not any activities related to obtaining an application for a wholesale origination. This entity is typically paid on a fee basis for services performed, with the payment of fees not being contingent on Mortgage approval or closing.

OriginationsLoans closed by the applicant organization.

PrincipalsA person with substantial management or supervisory responsibilities within an applicant's organization including stockholders with holdings of 5% or more.

Real Estate
Owned (REO)

Property acquired through foreclosure or deed in lieu of foreclosure.

Seller/ServicerAn institution approved to sell mortgages to, and to service mortgages purchased by, Freddie Mac.

Seller OnlyAn institution approved only to sell mortgages to Freddie Mac.

Servicer OnlyAn institution approved to service mortgages purchased by Freddie Mac.

Servicing
Staff
Personnel, including support staff, who administer mortgage collections, foreclosure, and REO, including payoff, escrow and vault/document custody staff.

Status ChangeChange from a Freddie Mac Seller Only or Servicer Only to Seller/Servicer status.

Servicing AgentA Servicer that has received Freddie Mac's authorization to act on behalf of another Servicer in servicing mortgages purchased by Freddie Mac.

Transfer of
Servicing (TOS)
The assignment, sale, conveyance or other transfer of all Servicing duties and responsibilities set forth in the Purchase Documents with respect to mortgages and REO owned in whole or in part by Freddie Mac.

Warehouse
Lender
A Warehouse Lender (also referred to as a "Warehouse Provider" or "Interim Finance Provider") is the bank or other financial institution, including a Federal Home Loan Bank, that has entered into an agreement with the Seller to provide interim financing in exchange for a security interest in, or the receipt of ownership to, Mortgages that are thereafter offered for sale to Freddie Mac.

Warehouse Line
of Credit
An agreement that covers the short-term financing by a Warehouse Lender up to a certain amount for a certain time to an entity using mortgages as collateral. This form of interim financing is used until the mortgages are sold to a permanent investor, such as Freddie Mac.

Wholesale Home
Mortgage
A Mortgage Broker or Correspondent completely or partially originated, processed, underwrote, packaged, funded or closed, and sold or assigned to a non-affiliate Seller that subsequently sold it to Freddie Mac.