TO: Freddie Mac Sellers and Servicers April 1, 2020 | 2020-9 SUBJECT: LIBOR TRANSITION – SOFR ARM ELIGIBILITY REQUIREMENTS In Guide Bulletin 2020-1, we announced the retirement of LIBOR-indexed ARMs. We also announced that in a future Bulletin we would provide eligibility requirements and new ARM Notes and riders in support of Freddie Mac’s purchase of ARMs that use an index based on a 30-day average of the Secured Overnight Financing Rate (SOFR) applicable to residential ARMs (SOFR Index). With this Bulletin, we are announcing: • Our eligibility, underwriting and delivery requirements for SOFR-indexed ARMs • The availability of new ARM Notes and riders specific to the SOFR ARM offering In addition, we are updating the Guide to reflect the retirement of LIBOR-indexed ARMs. SOFR ARMS Effective November 16, 2020 As of March 2, 2020, the Federal Reserve Bank of New York publishes the “30-day Average SOFR” each business day. Refer to the February 12, 2020 Federal Reserve Bank announcement for more information. We are updating the Guide to add a definition of “SOFR Index” to the Glossary and to reflect our eligibility, underwriting and delivery requirements for SOFR-indexed ARMs. Eligible SOFR-indexed ARMs Freddie Mac purchases nonconvertible rate-capped ARMs that are fully-amortizing First Lien Mortgages. The following nonconvertible SOFR-indexed ARMs will be eligible for purchase by Freddie Mac under the ARM Cash and WAC ARM Guarantor programs: Reference Index Interest and Initial Fixed Per Change Initial Periodic Life Min Max Prefix Product Source Payment Period Rate Cap Cap Cap Margin Margin (WAC ARM Label Type Adjustment Effective Adjustment (bps) (bps) Guarantor) Index Lead Months Frequency Days Count Count Months Count 3/6-Month 30-day 45 36 6 2 1 5 100 300 8A ARM Average SOFR 5/6-Month 30-day 45 60 6 2 1 5 100 300 8B ARM Average SOFR 7/6-Month 30-day 45 84 6 5 1 5 100 300 8C ARM Average SOFR Reference Index Interest and Initial Fixed Per Change Initial Periodic Life Min Max Prefix Product Source Payment Period Rate Cap Cap Cap Margin Margin (WAC ARM Label Type Adjustment Effective Adjustment (bps) (bps) Guarantor) Index Lead Months Frequency Days Count Count Months Count 10/6-Month 30-day 45 120 6 5 1 5 100 300 8D ARM Average SOFR Sellers should review revised Guide Sections 4401.2 through 4401.5 and 4401.8 for ARM eligibility requirements related to SOFR-indexed ARMs and Section 4401.9 and Exhibit 19, Credit Fees in Price, for information on the ARM Credit Fee in Price applicable to the sale of certain ARMs and other Credit Fees in Price. Underwriting requirements – implementation of redesigned Uniform Residential Loan Application and Uniform Loan Application Dataset Effective immediately, a Seller may manually underwrite SOFR-indexed ARMs; that is, the Seller may conclude that Borrower credit reputation and capacity are acceptable based on the documentation included in the Mortgage file and described on Guide Form 1077, Uniform Underwriting and Transmittal Summary, or another document in the Mortgage file, as required in Guide Topics 5100 through 5500. On and after October 1, 2020, Sellers may submit SOFR-indexed ARMs to Loan Product Advisor®; however, to be able to do this, Sellers must have implemented Loan Product Advisor specification v.5.0.06 in conjunction with the redesigned Form 65, Uniform Residential Loan Application, (“URLA”). Freddie Mac is not updating legacy Loan Product Advisor (specification v4.8.01) for the submission of SOFR-indexed ARMs. Sellers may use the redesigned URLA and Uniform Loan Application Dataset (ULAD) during the “Open Production” phase that runs from September 1, 2020 through October 31, 2020. Sellers must use the redesigned URLA and ULAD for Mortgages with Application Received Dates on and after November 1, 2020. Refer to the Uniform Mortgage Data Program® (UMDP®) March 10, 2020 announcement regarding UMDP updates to support the SOFR Index transition and guidance regarding automated underwriting system specification changes and use of the SOFR Index. Delivery requirements Sellers will be able to take out 30-day Average SOFR Cash Contracts in Loan Selling Advisor® to deliver SOFR-indexed ARMs beginning November 16, 2020. Sellers will be able to take out 30-day Average SOFR guarantor contracts in Loan Selling Advisor to deliver Mortgages into a WAC ARM PC beginning on November 16, 2020 for Mortgages with Settlement Dates on and after December 1, 2020. As announced in the March 10, 2020 UMDP communication, the Uniform Loan Delivery Dataset (ULDD) specification Appendix D – XML Data Requirements Reference Tool will be updated in the coming weeks to include the new ULDD Data Point and enumeration, which will be required for delivery of SOFR-indexed ARMs. Uniform Instruments With this Bulletin, we are announcing that the 30-day Average SOFR uniform ARM Notes and riders are now available on our Uniform Instruments web page for Sellers to use. Transfers of Servicing As a reminder, Seller/Servicers must not engage in a Transfer of Servicing involving 30-day Average SOFR-indexed ARMs with any Transferee Servicer that has not developed the operational capacity or capability to service 30-day Average SOFR-indexed ARMs. Bulletin 2 Additional resources and Guide updates We are updating Sections 4101.2, 4101.10, 4204.4, 4301.7, 4304.1, 4401.2 through 4401.5, 4401.8, 4501.3, 4601.1, 4603.3, 5101.1, 5703.3, 5703.9, 6201.3, 6302.7, Glossary, Exhibits 4, 17S and 34 to reflect SOFR-indexed ARMs. Additionally, we have created a fact sheet that summarizes the eligibility and delivery requirements for SOFR ARMs. RETIREMENT OF LIBOR ARMS Effective January 1, 2021 In Bulletin 2020-1, we announced that Freddie Mac will not purchase any LIBOR-indexed ARM with an Application Received Date on and after October 1, 2020. In addition, Freddie Mac will no longer purchase LIBOR-indexed ARMs on and after January 1, 2021, regardless of the Application Received Date or Note Date. We are updating the Guide to remove references to LIBOR-indexed ARMs. We will provide the Servicing requirements for the replacement index for ARMs indexed to LIBOR in a future Guide Bulletin. Guide impacts: Sections 4101.2, 4101.10, 4301.7, 4401.3, 4401.5, 6302.7, 8502.2, Exhibits 17S and 34 ARM NOTES AND RIDERS: DELIVERY REQUIREMENTS Effective April 1, 2020 In Bulletin 2020-1, we updated the Guide to require the valid value “J23” for ULDD Data Point, Investor Feature Identifier (Sort ID 368) for Mortgages using the revised ARM Notes and riders. We are updating the Guide to clarify that this delivery requirement only applies to CMT- and LIBOR-indexed ARMs. Guide impacts: Section 6302.7 and Exhibit 34 FUTURE RETIREMENT OF CMT ARMS Targeted for 2021 As announced in Bulletin 2020-1, under FHFA guidance, Freddie Mac will cease purchasing CMT-indexed ARMs at some point in 2021. We are developing plans to execute that guidance and will publish definitive requirements in a future Bulletin under the guidance of the FHFA. We are informing Sellers so that they may take this into consideration when developing their business and operational LIBOR transition plans. We do not recommend that Sellers increase their CMT- indexed ARM deliveries to Freddie Mac to address the expiration of LIBOR ARM purchases. GUIDE UPDATES SPREADSHEET For a detailed list of the Guide updates associated with this Bulletin and the topics with which they correspond, access the Bulletin 2020-9 (SOFR Requirements) Guide Updates Spreadsheet via the Download drop-down available at https://guide.freddiemac.com/app/guide/bulletin/2020-9. CONCLUSION If you have any questions about the changes announced in this Bulletin, please contact your Freddie Mac representative or call the Customer Support Contact Center at 800-FREDDIE. Sincerely, Danny Gardner Senior Vice President, Client and Community Engagement Bulletin 3 TO: Freddie Mac Servicers April 8, 2020 | 2020-10 SUBJECT: TEMPORARY SERVICING GUIDANCE RELATED TO COVID-19 Guide Bulletins 2020-4 and 2020-7 provided temporary Servicer guidance in response to the National Emergency Declaration resulting from the outbreak and spread of COVID-19. This Bulletin provides revised temporary guidance in response to feedback from Servicers, including questions relating to the impact of the recently enacted Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). In an effort to provide enhanced clarity for our Servicers, we are updating requirements pertaining to the below listed topics, while also reminding Servicers that they must always comply with all applicable federal, State and local laws, ordinances, regulations, orders and regulatory guidance. Topics addressed in this Bulletin include: • Credit reporting requirements • Foreclosure moratorium • Bankruptcy motions for relief from automatic stay • Forbearance plans • Quality right party contact (QRPC) Additionally, we are clarifying that our requirements for the Servicing of Mortgages for Freddie Mac Borrowers impacted by COVID-19 related hardships (as described in Bulletin 2020-4) are separate and distinct from our requirements for the Servicing of Mortgages and Borrowers impacted by an Eligible Disaster. While we are leveraging certain aspects of our disaster Servicing practices, the requirements for how we are applying those and other COVID-19 requirements are described in Bulletins 2020-4, 2020-6, 2020-7 and this Bulletin. Servicers must not submit disaster reporting codes to Freddie Mac or otherwise leverage disaster related requirements that have not been expressly approved for application as part of our COVID-19 response in one of the previously referenced Bulletins or related Purchase Documents. This includes, but is not limited to: i) proactively applying forbearance without any communication with the Borrower and, ii) suppression of credit reporting (see updated credit reporting requirements below).