Payoff Process Enhancements

May 2014

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Overview of changes

Yield Maintenance (YM) calculation standardized

Allows more flexibility for Yield Maintenance payoffs with unscheduled date changes

Improve timelines of payoff exceptions

Extended Prepayment Option

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Payoff Calculation Standardization

Freddie Mac has 2 different Yield Maintenance Riders (7/93 or 9/96)

Effective June 2, 2014,Yield Maintenance calculation will be standardized with industry standards

Utilizing the 9/96 Rider or Standard Calculation starts with the first of the month following the date of the Note until the end of the Yield Maintenance period (full months - not partial)

No change to the calculation – Only 9/96 option available

The 7/93 option should no longer be utilized effective June 2, 2014

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MF Multisuite Yield Maintenance Calculator

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Yield Maintenance Calculator - Rider

Change

» Rider selection

– No change to calculation

Yield Maintenance Type

» “9/96” Only Option

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Yield Maintenance Calculator – Remaining Term

Example

» Remaining YM Period - Full Months

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Extended Prepayment Option

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Payoff Date Changes - Flexibility

Extended Prepayment Option

» Borrower submits Request to Payoff mortgage to Servicer

» Servicer presents extended prepayment option to Borrower and provides the Borrower Authorization form

» Borrower initials and signs the Borrower Authorization form and returns to Servicer

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Borrower Authorization Form

Form must be initialed and signed by the Borrower; then returned to the Servicer

Servicer must maintain the original executed form

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Extended Option payoff request

Servicer completes the new “Loan Payoff Notice”

New Section “Extended Payoff” added to the Loan Payoff Notice

» This section is completed if the Extended Prepayment Option has been accepted by the borrower prior to submitting the request to Freddie Mac

Servicer completes the Extended Payoff section

» Extended payoff quote expiration must be populated

Servicer uploads the completed “Loan Payoff Notice” to DMS

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New Loan Payoff Notice

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Payoff Expiration Date Scenario’s

Scenario 1

» Loan scheduled to payoff March 3, 2014

» Extended payoff Quote Expiration - March 10, 2014

Scenario 2

» Loan scheduled to payoff March 24, 2014

» Extended payoff Quote Expiration - March 31, 2014

Scenario 3 *

» Loan scheduled to payoff March 26, 2014

» Extended payoff Quote Expiration - March 31, 2014*If scheduled payoff is < less than 5 Business days before the last business day of the

month, the quote expiration date must be the last business day of the month

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Summary

Effective June 2, 2014

» Use standardized calculation for all payoffs (9/96 method)

» Utilize the new “Loan Payoff Notice” form

» Offer the extended payoff option to borrowers

» Maintain original borrower authorization

Questions?

» Contact your payoff representative

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Payoff Team

Name Designation EmailContact Number

Carl McLaughlinLoan Servicing Director Carl_mclaughlin@freddiemac.com 704-714-3803

Sherry StanardMF Loan Accounting Manager sherry_stanard@freddiemac.com 703-714-2863

Felicia Hicks Team Lead felicia_hicks@freddiemac.com 703-714-2897

Marcus Valentine Team Lead marcus_valentine@freddiemac.com 703-714-3045

Winston Burrows Senior winston_burrows@freddiemac.com 703- 714-2913

Payoff Mailbox: Mfopsloanacctpayoffs@freddiemac.com

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Thank you.

Any Questions?