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FINANCIAL AGENCY AGREEMENT 

for a 

HOMEOWNERSHIP PRESERVATION PROGRAM 

under the 

EMERGENCY ECONOMIC STABILIZATION ACT OF 2008 

This Financial Agency Agreement (FAA) is entered into as of February 18, 2009 (Effective 

Date), by and between the U.S. Department of the Treasury (Treasury), and Freddie Mac 

(Financial Agent). 

Recitals 

To implement the Emergency Economic Stabilization Act of 2008 (Act), the Treasury may 

designate Financial Institutions as financial agents of the United States to provide all such 

reasonable duties related to the Act as may be required. 

Pursuant to the Act, the Treasury is establishing a Homeownership Preservation Program 

(Program) encompassing loan modifications, foreclosure prevention, loss mitigation, and other 

services, and has determined that it is in the interests of the United States to designate a financial 

agent to provide for such services. 

The Financial Agent desires to serve as a financial agent of the United States under the terms and 

conditions contained herein. 

Accordingly, in consideration of the representations, warranties, and mutual agreements set forth 

herein and for other good and valuable consideration, the receipt and sufficiency of which are 

hereby acknowledged, the Treasury and the Financial Agent agree as follows. 

1. Designation and authorization 

Pursuant to the authority of the Secretary of the Treasury under the Act, the Treasury hereby 

designates and authorizes the Financial Agent to act as a financial agent of the United States 

under the terms and conditions of this FAA to perform certain services as more fully described in 

Exhibits A and C. 

2. Term 

A. The initial term of this FAA is for 5 years from the Effective Date and shall expire on 

February 17, 2014, unless terminated earlier by the Treasury pursuant to the provisions hereof. 

B. The Treasury shall have the right and option to extend the term of this FAA beyond the 

initial expiration date for a total of 5 consecutive 1-year extensions. The Treasury may exercise 

any such extension option by giving written notice to the Financial Agent at least 60 calendar 

days prior to the end of the then current term. In the event any such extension option is 
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exercised by the Treasury, this FAA shall continue in full force and effect for the term of the 

extension. 

C. The Financial Agent acknowledges that the services provided under this FAA are vital to the 

United States and must continue without interruption during any transition period if the Treasury 

decides to use a different entity to perform such services in the future, if the Treasury decides to 

perform such services itself, or if termination of the FAA requires an orderly shutdown of 

services. To provide for such a transition, the Treasury shall have the right to extend the term of 

this FAA beyond any expiration date for a period not to exceed 1 year. The Treasury may 

exercise such option by giving written notice of such extension to the Financial Agent prior to 

the end of the then current term. The Treasury will use reasonable efforts to provide such 

written notice at least 30 calendar days prior to the end of the then current term. The Treasury 

may reduce the number or extent of services to be provided by the Financial Agent during any 

such transition period. The Treasury agrees that it will work diligently to transfer or shutdown 

the services performed hereunder as soon as reasonably possible. 

D. The Financial Agent agrees to cooperate with the Treasury and/or any successor service 

providers or financial agents and to provide such services as are necessary to ensure an effective 

and orderly transfer or shutdown of services, functions, records, and data during the transition 

period. 

E. If this FAA is terminated before the end of the term, the Financial Agent will only be 

compensated for services performed through the effective date of termination. 

3. Services to be provided by Financial Agent 

A. The Financial Agent shall perform the services required under this FAA, as more fully 

described in Exhibits A and C, in accordance with the practices, high professional standards of 

care, and degree of attention used in a well-managed operation, and no less than that which the 

Financial Agent exercises for itself under similar circumstances. The Financial Agent shall use 

qualified individuals with suitable training, education, experience and skills to perform the 

services. 

B. Unless specifically authorized otherwise by the Treasury in writing, the Financial Agent shall 

ensure that all employees of the Financial Agent and its contractors providing services under this 

FAA are United States citizens or lawful permanent residents performing their work in the 

United States, and that the operation and maintenance of all systems and databases used in 

providing services under this FAA are in the United States. 

C. The Treasury may, in its sole discretion, modify, add to, or reduce the specific services 

required under the general scope of this FAA by providing written notice to the Financial Agent. 

If any such modification, addition or reduction causes an increase or decrease in the cost of, or 

the time required for, performance of any service required by this FAA, the Treasury and the 

Financial Agent will negotiate an equitable adjustment in the compensation for the service or 

other terms of performance. 
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D. The Treasury may periodically issue instructions through bulletins, letters, or other 

communications, consistent with this FAA, which will further describe or clarify the scope of the 

duties and services of the Financial Agent under this FAA. To the extent that any such 

instructions are inconsistent with the terms of this FAA or would constitute a material change in 

the terms or scope of services under this FAA, the terms of this FAA shall govern. 

E. The Financial Agent shall keep the Treasury informed of changes in technology and business 

methods that might allow the Financial Agent to perform its services under this FAA in a more 

efficient or cost effective manner. 

F. Consistent with Section 3B, the Treasury may authorize the Financial Agent to engage noncitizens working outside the United States to perform certain functions, provided such functions 

represent routine practices used to support other Financial Agent activities similar to those under 

this FAA. 

4. Compensation 

 

A. The Treasury shall compensate the Financial Agent for services in accordance with Exhibit 

B, as amended from time to time. 

B. The Treasury does not guarantee any set quantity of transactions, minimum volume of assets 

or business, or related level of compensation to the Financial Agent and shall not adjust 

compensation on the basis that volumes or quantities did not meet the Financial Agent’s 

expectations. 

C. The Financial Agent shall maintain complete and accurate records of and supporting 

documentation for the amounts billable to the Treasury, and payments made by the Treasury. 

The Financial Agent shall follow generally accepted accounting principles when recording or 

reporting any such administrative accounting of the services provided under this FAA. The 

Financial Agent agrees to provide the Treasury with documentation and other information with 

respect to any amounts billed to the Treasury as may be reasonably requested by the Treasury. 

D. The Treasury may deduct from any amount to be paid to the Financial Agent any amount 

that the Financial Agent is obligated to reimburse or pay to the Treasury. 

E. Notwithstanding any other provision in this FAA, all compensation and funding shall be 

subject to the availability of funds. Notwithstanding any other provision of this FAA, the 

Financial Agent shall not enter into any agreements, commitments, or otherwise obligate the 

Treasury to provide Program funds to a servicer, borrower, or investor until the Financial Agent 

has received written direction from the Treasury to do so. 

5. Financial Agent’s fiduciary duty 

The Financial Agent acknowledges and agrees that it owes a fiduciary duty of loyalty and fair 

dealing to the United States when acting as a financial agent of the United States. The Financial 

Agent agrees to act at all times in the best interests of the United States when carrying out its 
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responsibilities under this FAA and in all matters connected with this agency relationship. The 

Financial Agent acknowledges and agrees that its fiduciary duties under this FAA include, but 

are not limited to, the following: 

- to perform its obligations with care, competence, and diligence; 

- to construe the terms of this FAA and any related instructions from the Treasury in a 

reasonable manner to serve the purposes and interests of the United States; 

- to use any nonpublic information or assets of the United States received or developed in 

connection with this FAA solely for the purposes of fulfilling its duties to the Treasury 

and not for its own commercial purposes or for those of a third party; 

- to comply with 31 CFR Part 31, as may be amended from time to time, and with all 

conflict of interest, non-disclosure, and information barrier obligations and restrictions, 

and all conflict of interest mitigation measures, fully and in good faith, as set forth in the 

FAA; and 

- to act only within the scope of its actual authority and to comply with all lawful 

instructions or directions received from the Treasury. 

6. Nonpublic information 

A. The Financial Agent shall take appropriate measures to ensure the confidentiality of 

nonpublic information and to prevent its inappropriate use, and shall document these measures in 

sufficient detail to demonstrate compliance. Nonpublic information shall include any 

information that the Treasury provides to the Financial Agent pursuant to this FAA, or that the 

Financial Agent obtains or develops pursuant to this FAA, until the Treasury determines the 

information is otherwise in writing, or until the information becomes part of the body of public 

information from a source other than the Financial Agent. Nonpublic information includes, but 

is not limited to, information about the Treasury’s business, economic, and policy plans, 

financial and asset information, trade secrets, information subject to the Privacy Act, personally 

identifiable information (PII) , and sensitive but unclassified (SBU) information. 

B. SBU information is defined as any information that the loss, misuse, or unauthorized access 

to or modification of could adversely affect the national interest or the conduct of Federal 

programs, or the privacy of individuals that they are entitled to under the Privacy Act. In 

addition, this includes trade secret or other information protected by the Trade Secrets Act. This 

definition may include other information designated by the Treasury or as defined by other 

Federal Government sources not mentioned above. 

C. PII means any information about an individual, including, but not limited to, education, 

financial transactions, medical history, and criminal or employment history and information 

which can be used to distinguish or trace an individual’s identity, such as their name, social 

security number, date and place of birth, mother’s maiden name, biometric records, etc., 

including any other personal information which is linked or linkable to an individual. 
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D. The Financial Agent shall use such nonpublic information solely for the purposes of fulfilling 

its duties under this FAA and not for its own commercial purposes or for those of a third party. 

The Financial Agent may disclose such nonpublic information only to those employees of the 

Treasury or the Financial Agent or its contractors, who have a legitimate need to know the 

information to assist in the proper performance of services required by this FAA, consistent with 

31 CFR Part 31 and with the conflict of interest mitigation and information barrier measures 

identified in Exhibit F. The Financial Agent shall require any contractor that provides services 

under this FAA to agree in writing to confidentiality obligations substantially the same as those 

in this FAA. 

E. The measures required by this Section to protect nonpublic information shall include, but are 

not limited to, (i) security measures to prevent unauthorized access to facilities and storage 

containers where nonpublic information is stored, (ii) security measures to detect and prevent 

unauthorized access to computer equipment and data storage devices that store or transmit 

nonpublic information, in accordance with Section 9, (iii) periodic training to ensure that persons 

receiving nonpublic information know their obligations to maintain its confidentiality and to use 

it solely for purposes contemplated by this FAA, and (iv) programs to ensure compliance with 

Federal securities laws, including laws relating to insider trading. 

F. The Treasury may periodically issue other policy statements or guidance to clarify the 

Financial Agent’s obligations regarding nonpublic information. If the Financial Agent has any 

questions on the designation or proper handling of nonpublic information, it shall immediately 

seek clarification from the Treasury whose decision shall be binding upon the Financial Agent. 

G. The Financial Agent’s agreement with respect to nonpublic information is a continuing one 

that shall survive the termination or expiration of this FAA. However, the Financial Agent shall 

not be required to protect nonpublic information that becomes part of the body of public 

information from a source other than the Financial Agent. 

 

H. The Financial Agent shall strictly enforce the terms of any non-disclosure agreements it has 

with its employees and contractors regarding services provided under this FAA. In addition, the 

Financial Agent shall ensure that each employee of the Financial Agent and all contractor 

personnel to whom nonpublic information is or may be disclosed, shall review and sign a NonDisclosure Agreement containing substantially the provisions and obligations in Exhibit E. 

I. Notwithstanding the requirements of this Section, the Financial Agent may disclose nonpublic 

information if required pursuant to a lawful court order or valid subpoena after giving prior 

notice to the Treasury, or may disclose nonpublic information to and if required by its Federal 

regulator. 
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7. Breaches of nonpublic information 

A. The Financial Agent shall immediately notify the Treasury of any actual or suspected 

breaches of nonpublic information that may occur while handling Treasury data, whether paper 

or electronic, including unauthorized access, use, disclosure, or loss of nonpublic information. 

Such immediate notification should occur whether before or after regular business hours or on a 

weekend or holiday, and should not be delayed as the Financial Agent researches or confirms the 

particular details on an incident or suspected incident. 

B. In response to a reported breach of nonpublic information, the Treasury may request the 

Financial Agent to conduct an investigation and report detailed findings as to the cause and 

impact of the breach as well as the remediation taken. As determined by the Treasury after 

reviewing any investigation conducted by the Financial Agent, the Financial Agent may be liable 

and may be required to reimburse the Federal Government or any affected individual for any 

costs, expenses, or damages which result from the fraud, theft, willful misuse or negligence of 

the Financial Agent, its contractors, Financial Agent employees, or contractor personnel with 

respect to the handling and maintenance of nonpublic information. 

C. The Financial Agent must ensure that all of its employees and contractor personnel impacted 

by this Section receive the proper education and guidance. 

8. Privacy Act 

The Treasury may determine that, in connection with the services provided under this FAA, the 

Financial Agent has obtained or developed a system of records as defined under the Privacy Act 

of 1974, 5 U.S.C. § 552a. For purposes of the Privacy Act, when a Government agency 

delegates the development, operation or maintenance of a system of records on individuals to 

accomplish an agency function, the person that operates the system is bound by the Privacy Act 

as if such person were an employee of the agency. Violations of the Privacy Act may involve 

the imposition of criminal penalties. If the Treasury makes such a determination, it shall so 

notify the Financial Agent. After receiving such notice, the Financial Agent shall promptly 

provide training to all of its employees and contractor personnel with access to such system of 

records on the duties and responsibilities imposed on them by the Privacy Act and by applicable 

regulations and guidance, including the potential penalties for wrongful disclosure. 

9. Information technology security 

A. The Financial Agent shall develop, maintain, enforce, and at least annually review for 

effectiveness, information technology security measures designed to ensure the (i) availability, 

(ii) access controls, and (iii) integrity of any systems, databases, or data stores containing or 

processing nonpublic information. 

B. The availability measures shall be designed to ensure such systems, databases, or data stores 

are available for operation and use to support the services required under this FAA. The access 

control measures shall be designed to ensure such systems, databases, or data stores are 

protected against unauthorized access and use. The integrity measures shall be designed to 
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ensure that systems processes and storage and retrieval of nonpublic information in databases or 

data stores, are complete, accurate, and protected against unauthorized modification. 

C. Within 90 days of the Effective Date of this FAA, and on June 1 of each year thereafter that 

this FAA is in effect, the Financial Agent shall submit to the Treasury for review and approval 

the specific information technology security measures described above. In addition, the internal 

control program, required by Section 16, must include review of the information technology 

control objectives and control techniques, and testing of operational effectiveness of information 

technology security measures. 

D. For any database created by the Financial Agent under this FAA that may contain loan level 

data on credit characteristics, modifications, and performance, the Financial Agent shall ensure 

that access is limited to the need to know pursuant to the FAA, that any access granted shall be at 

the minimum levels required in each instance, and that appropriate controls are in place designed 

to ensure that no one will access or use the data in such database, or any derivatives thereof, for 

any purpose other than performing services under the FAA, with such impermissible purposes 

including without limitation for conducting market research, credit risk analysis, securities 

performance analysis, or underwriting for the Financial Agent’s activities outside this FAA. 

10. Personnel security 

A. The Treasury will rely on the Financial Agent’s personnel security screening standards. The 

Financial Agent shall ensure that all of its employees and contractor personnel who have access 

to nonpublic information have appropriate personnel security background checks. 

B. The Financial Agent shall provide the Treasury with a listing of all such background 

investigative requirements (e.g., FBI fingerprint check, police check, credit check, verification of 

lawful permanent resident status, etc.). The Treasury may request additional personnel security 

checks. 

C. Consistent with Section 3B, all Financial Agent employees and contractor personnel who 

have access to nonpublic information must be U.S. citizens or lawful permanent residents 

performing their work in the continental United States. 

11. Conflicts of interest mitigation and information barriers 

A. Consistent with Exhibit F, the Financial Agent and its contractors shall adequately segregate 

personnel or employ suitably robust internal controls designed to ensure that the Financial 

Agent’s personnel and those of its contractors assigned to provide services under this FAA do 

not divulge information regarding the Program to other personnel involved with the Financial 

Agent’s or its contractor’s other activities that may conflict with duties owed to the Treasury. 

No nonpublic information related to the management of the Program shall be revealed to such 

other personnel, except as required by law, or as required for internal senior management or 

legal purposes consistent with the Financial Agent’s duties owed to the Treasury. 
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B. As part of its obligation to comply with the conflict of interest requirements of this FAA, the 

Financial Agent shall implement the conflict of interest mitigation and information barrier 

measures set forth in Exhibit F throughout the term of this FAA. 

12. Employee codes of conduct and ethics 

The Financial Agent must establish policies and procedures reasonably designed to assist all 

individuals performing services under this FAA to comply with applicable laws and regulations, 

and to comply with requirements for the disclosure and the avoidance, mitigation, or 

neutralization of any actual or potential personal conflicts of interest, consistent with the 

provisions of Exhibit F. The Financial Agent must have in place policies and procedures 

establishing a Code of Conduct and a Code of Ethics. 

13. Representations and warranties 

The Financial Agent represents and warrants to the Treasury the following, the truth and 

accuracy of which are a continuing condition of the Financial Agent’s responsibilities to the 

Treasury: 

A. The Financial Agent is an institution established and regulated under the laws of the 

United States or any State, territory, or possession of the United States and having 

significant operations in the United States. 

B. The Financial Agent has full corporate power and authority to enter into, execute, and 

deliver this FAA and to perform its obligations hereunder. 

C. The Financial Agent has obtained or made all governmental approvals or registrations 

required under law to authorize the performance of its obligations under this FAA, it 

being understood that the Treasury hereby consents to the Financial Agent entering into 

this FAA in accordance with the requirements of the Senior Preferred Stock Purchase 

Agreement dated September 26, 2008, between the Treasury and the Financial Agent. 

The Financial Agent is not aware of any legal or financial impediments to performing its 

obligations under this FAA that it has not disclosed in writing to the Treasury. 

D. The Financial Agent is not delinquent on any Federal tax obligation or any other debt 

owed to the United States or collected by the United States for the benefit of others. 

E. The Financial Agent is not on any Federal excluded parties, debarments, or suspension 

lists. 

F. The Financial Agent has or shall promptly obtain all required licenses, bonding, facilities, 

equipment and trained personnel to perform its obligations under this FAA. 
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G. The Financial Agent owns or is licensed to use, or shall promptly obtain such ownership 

or license to use, software programs and data processing hardware that are necessary for 

it to perform its obligations under this FAA, and to the best of its knowledge such 

software programs and data processing hardware do not infringe upon or constitute an 

infringement on or misappropriation of any valid United States patent, copyright, 

trademark, trade secret or other proprietary rights of any third party. 

H. The Financial Agent agrees to comply with regulations on conflicts of interest and other 

matters at 31 CFR Part 31, as may be amended from time to time, as well as more 

stringent provisions that may be imposed by this FAA. In addition, the Financial Agent 

covenants to disclose all actual or potential organizational conflicts of interest, including 

prompt disclosure of any conflicts with the interests of any contractors as soon as they 

come to the Financial Agent’s attention, and to avoid, mitigate, or neutralize to the extent 

feasible and to the Treasury’s satisfaction any personal or organizational conflicts of 

interest that may be identified by the Treasury or the Financial Agent, consistent with the 

conflict mitigation measures set forth in Exhibit F. 

I. If doing other business with the Treasury or another Federal agency, the Financial Agent 

is not in any kind of probationary status, and is addressing and resolving any identified 

deficiencies in performance. 

J. The Financial Agent covenants to disclose to the Special Inspector General created under 

the Act, or the Treasury Office of the Inspector General, any credible evidence, in 

connection with the designation, services, or closeout of this FAA, that a management 

official, employee, or contractor of the Financial Agent has committed (a) a violation of 

Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations 

found in Title 18 of the United States Code, or (b) a violation of the civil False Claims 

Act (31 U.S.C. §§ 3729-3733). 

K. The Financial Agent covenants to disclose any other facts or information that the 

Treasury should reasonably expect to know about the Financial Agent and its contractors 

to help protect the reputational interests of the Treasury and the Financial Agent in 

managing the Program. 

The Financial Agent shall sign an annual certification, and deliver it to the Treasury on June 1 of 

each year this FAA is in effect, in the form set forth in Exhibit D. 

14. Use of contractors 

A. Except as provided in Section 15, the Financial Agent shall use only its own employees to 

perform services under this FAA, unless the Financial Agent obtains the prior written consent of 

the Treasury to use contractors to perform such services. The Treasury may approve or reject 

any contractor in its sole discretion. The Treasury shall have the right to impose requirements 

for any such contractor including, without limitation, requirements relating to the location of the 

contractor’s offices, the citizenship of the contractor’s employees, and the contractor’s physical 

and data security systems. 
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B. The Financial Agent must execute any agreement with a contractor in its own name and not 

on behalf of the United States or the Treasury, and any such contractor does not become a 

subcontractor, agent, or subagent of the Treasury. The Treasury shall not be deemed a party to 

any arrangement or agreement the Financial Agent may enter into with another entity to perform 

any services under this FAA. The Treasury will not be liable for any payment to any entity other 

than the Financial Agent. 

C. The Financial Agent is responsible for the supervision and management of any contractor 

that assists in the performance of services under this FAA. The Financial Agent shall remove 

and replace any contractor that fails to perform. The Financial Agent shall ensure that all of its 

contractors comply with the terms and provisions of this FAA. The Financial Agent shall be 

responsible for the acts or omissions of its contractors as if the acts or omissions were by the 

Financial Agent. 

15. Small Business Contractors, Including Minority- or Women-Owned Contractors 

The Financial Agent agrees to engage one or more small businesses as contractors, including 

minority- or women-owned businesses, to provide a portion of the services described in 

Exhibits A and C. Such contractors shall serve as the direct providers of required services, and 

not as ancillary or secondary support providers to another entity directly responsible for the 

services. The Treasury reserves the right to approve or reject the contractors in its sole 

discretion. 

16. Internal control program 

The Financial Agent shall develop, enforce, and at least annually review for effectiveness, an 

internal control program designed to ensure effective delivery of services under this FAA and 

compliance with Program Guidelines. The internal control program must include documentation 

of the control objectives for major Program activities, the associated control techniques, and 

mechanisms for testing and validating the controls. 

17. Reviews and audits 

The Treasury, the Treasury Inspector General, the Special Inspector General created under the 

Act, the Government Accountability Office, and other entities as authorized by the Treasury 

shall have the right during normal business hours to conduct announced and unannounced onsite 

and offsite physical, personnel and information technology testing, security reviews, and audits 

of the Financial Agent, and to examine all books and records, related to the services provided 

and compensation received under this FAA. The Financial Agent shall be responsible for 

implementing corrective actions associated with such testing, reviews, or audits as directed by 

the Treasury. 

The Financial Agent shall provide the Treasury with access to all internal control reviews that 

relate to services under this FAA performed by the Federal Housing Finance Agency (FHFA) 

and the Financial Agent’s independent auditing firm. 
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18. Intellectual property rights 

A. For purposes of this Section, the following definitions apply: 

 “Business Methods” means any ideas, concepts, designs, practices, and business methods 

created by the Financial Agent or its contractors, jointly or independently, expressly for the 

purpose of providing the services under this FAA. 

“Data” means any recorded information, regardless of form or the media on which it may 

be recorded, regarding any of the services described in this FAA. 

 “Federal Government” means any Federal Government department, agency, bureau, 

corporation or instrumentality, or any Federal Reserve Bank. 

“Unlimited Rights” means non-exclusive perpetual rights to, without limitation, use, 

copy, maintain, modify, enhance, disclose, reproduce, prepare derivative works, and distribute, 

in any manner and for any purpose and to permit others to do so. 

B. The Treasury shall have Unlimited Rights to Business Methods and may use them for any 

purpose within the Treasury’s authority. 

C. Except as otherwise provided herein or prohibited by law, the Treasury shall have Unlimited 

Rights to all data produced or developed, or obtained without restriction, by the Financial Agent 

or a contractor of the Financial Agent for the purpose of providing services under this FAA. If 

requested, such data shall be made available to the Treasury in industry standard useable format. 

 

D. In accordance with 28 U.S.C. § 1498, the Treasury hereby authorizes and consents to all use, 

manufacture, and production of any invention, product or work described in and covered by a 

United States patent or copyright by the Financial Agent or a contractor of the Financial Agent in 

the performance of this FAA. 

19. Liability of Financial Agent 

A. If any act or omission by the Financial Agent or a contractor of the Financial Agent results in 

a delay in processing or transferring funds to the Treasury, or in delivering transaction 

information that prevents the Treasury from making use of funds, the Financial Agent is liable 

and shall reimburse the Treasury for the time value amount of such loss. The Treasury may 

reconsider any liability claim against the Financial Agent if the Treasury, in its sole discretion, 

determines that any delay arose out of causes beyond the control and without the fault or 

negligence of the Financial Agent. 

B. Except as otherwise provided in this Section, the Financial Agent will not be liable to the 

Treasury for (i) any loss incurred by reason of any Program decision or action taken or omitted 

in what the Financial Agent believes in good faith to be the proper performance of its duties; (ii) 

any exercise of, or failure to exercise, any discretionary authority duly granted to the Financial 
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Agent under this FAA; (iii) errors by the Treasury or its duly designated financial agents in data 

or instructions provided to the Financial Agent; (iv) fraud by, acts or omissions of, or good faith 

reliance on information from, independent third-parties not under contract with the Financial 

Agent to provide required services under this FAA, such as lenders, servicers, or borrowers; (v) 

occasional clerical, administrative, or document keying errors which may occur as a result of 

intensive manual processes, provided that, in the Treasury’s sole determination, such errors are 

not due to lack of an appropriate internal control system; (vi) any action taken or omitted by its 

reliance on the receipt of electronic transmissions with the proper security codes or passwords 

that the Financial Agent reasonably believes to be from the Treasury or its duly designated 

financial agents; and (vii) events beyond the control of the Financial Agent and which can not be 

avoided or mitigated by the exercise of expected diligence, care, and contingency planning. 

C. The Financial Agent is liable and shall reimburse the Treasury for any monetary loss or costs 

which result from the fraud, theft, embezzlement, willful misconduct, bad faith, or negligence of, 

or breach of fiduciary duty by, the Financial Agent or a contractor of the Financial Agent. The 

Treasury will reconsider any liability claim against the Financial Agent resulting from 

negligence if the Treasury, in its reasonable judgment, determines the failure to exercise 

reasonable care was not caused by lack of an appropriate internal control system. 

D. The Financial Agent may be liable for costs, expenses, or damages associated with a breach 

of nonpublic information, as set forth in Section 7. 

E. If the Treasury reasonably believes that the Financial Agent is in breach of this FAA, an 

investigation of the Financial Agent’s actions by the Treasury or another entity may be required. 

 If ultimately found to be in breach, the Financial Agent shall be liable for the reasonable costs 

and expenses of any such investigation to the extent that such costs and expenses are reasonably 

documented. 

20. Notice to the Treasury 

The Financial Agent shall promptly notify the Treasury if (i) the Financial Agent becomes aware 

of any loss, damage, investigation, action, proceeding or claim related to its performance under 

this FAA that may have a material adverse effect on the Treasury or the United States or that 

may damage the public’s trust in the operations of the Treasury, (ii) the Financial Agent breaches 

any material obligation or condition of this FAA, or (iii) any representation or warranty made by 

the Financial Agent herein ceases to be true. 

21. Defaults 

The following, as solely determined by the Treasury, constitute events of default by the Financial 

Agent under this FAA: 

A. The Financial Agent fails to perform or comply with any of its material obligations under 

this FAA. 
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B. The Financial Agent, its contractors, or any employee of the Financial Agent or any 

contractor personnel commits a negligent, willful, or reckless act in connection with 

services or activities under this FAA. 

C. The Financial Agent breaches a fiduciary duty to the United States with respect to its 

responsibilities under this FAA. 

D. Any representation or warranty made herein by the Financial Agent is or becomes 

materially false, incorrect, or incomplete. 

E. The Financial Agent is or becomes delinquent on any Federal tax obligation or any other 

debt owed to the United States Government or collected by the United States for the 

benefit of others. 

F. A receiver, liquidator, trustee, or other custodian is appointed for the Financial Agent, 

provided that the existence or continuation of FHFA’s conservatorship of the Financial 

Agent shall not constitute an event of default. 

G. The Financial Agent is in default under any other agreement between the Financial Agent 

and the Treasury or any bureau of the Treasury. 

22. Remedies for default 

The Treasury may take any, all, or none of the following actions in the event of a default by the 

Financial Agent under this FAA: 

A. The Treasury may terminate this FAA and cease its performance hereunder. If this FAA 

is terminated, the designation and authorization of the Financial Agent for purposes of 

providing the services under this FAA are revoked. 

B. The Treasury may reduce the scope of services under this FAA and cease a portion of its 

performance hereunder. If the scope of this FAA is reduced, the authorization of the 

Financial Agent for purposes of providing the discontinued services under this FAA is 

revoked. 

C. The Treasury may revoke the Financial Agent's designation as a financial agent for the 

United States, encompassing this FAA and any other financial agency agreement with the 

Treasury, which shall be deemed terminated as of the effective date of such revocation. 

D. The Treasury may declare any other agreement between the Financial Agent and the 

Treasury to be in default. 

E. The Treasury in its sole discretion may put a Financial Agent on probation for failing to 

perform satisfactorily a service (or services) delineated in this FAA. Probation means 

that the Treasury will withhold some or all of the Financial Agent’s compensation until in 

the Treasury’s determination the Financial Agent has cured the non-performance issues. 
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The Treasury reserves the right to consider other measures in addition to withholding the 

compensation if the Financial Agent is put on probation, including but not limited to, 

preclusion from additional work under the existing agreement and ineligibility to be 

designated for other work under a new agreement. The payment of compensation may 

also be adjusted consistent with Section 19 (Liability of Financial Agent.) 

F. The Treasury may consider information or history regarding any default hereunder when 

making any decisions regarding future use of the Financial Agent for performance of 

financial agent services. 

G. The Treasury may take any other action available at law or in equity. 

23. Termination in the interest of the United States 

Notwithstanding any other provision of this FAA, when the Treasury in its sole discretion 

determines that such actions are necessary to protect the interests of the United States 

Government, the Treasury may reduce the authorized scope of work under this FAA, terminate 

this FAA, or revoke the Financial Agent’s status as a financial agent of the United States even in 

the absence of an event of default by the Financial Agent under this FAA. 

24. Disputes 

The Treasury and the Financial Agent agree that it is in their mutual interest to resolve disputes 

by agreement. If a dispute arises under this FAA, the parties will make all reasonable efforts to 

resolve the dispute by mutual agreement. If a dispute cannot be resolved informally by mutual 

agreement at the lowest possible level, the dispute shall be referred up the respective chain of 

command of each party in an attempt to resolve the matter. This will be done in an expeditious 

manner. The Financial Agent shall continue diligent performance of the services required by 

this FAA pending resolution of any dispute. The Treasury and the Financial Agent reserve the 

right to pursue other legal or equitable rights they may have concerning any dispute. However, 

the parties agree to take all reasonable steps to resolve disputes internally before commencing 

legal proceedings.

25. Data and records retention 

In addition to its fiduciary duties and any other obligation to retain financial and accounting 

records that may be imposed by Federal or state law, the Financial Agent shall retain all data, 

books, reports, documents, audit logs and records, including electronic records, related to the 

performance of services required by this FAA. In addition, the Financial Agent shall maintain a 

copy of all computer systems and application software necessary to review and analyze these 

electronic records. Unless otherwise directed by the Treasury, the Financial Agent shall retain 

these records for at least 7 years from the date the data or record was created. The Treasury may 

also notify the Financial Agent from time to time of any additional records retention 

requirements resulting from litigation in which the Treasury may have an interest, and the 

Financial Agent agrees to comply with these litigation requirements. 
15

26. Transfer or assignment 

A. The Financial Agent may not transfer or assign its rights under this FAA without the prior 

written consent of the Treasury, which may be granted or withheld in the sole discretion of the 

Treasury. Any purported transfer or assignment without the prior written consent of the 

Treasury shall be void. 

B. The Financial Agent shall notify the Treasury as soon as legally possible of any proposed 

merger, acquisition, or other action involving the Financial Agent or a contractor of the Financial 

Agent that will affect the Financial Agent’s ability to carry out its responsibilities under this 

FAA. 

C. In the event that the Financial Agent is involved in a merger or acquisition, the Treasury 

may, in its sole discretion, elect to continue this FAA and to treat the Financial Agent’s 

successor in interest to be a successor financial agent. If the Treasury elects not to continue this 

FAA, the Treasury shall notify the Financial Agent of the termination date of the FAA. 

27. Notices 

All notices required to be given herein shall be in writing and shall be given to the following 

contacts unless expressly stated otherwise herein: 

To the Treasury: 

Gary Grippo 

Deputy Assistant Secretary 

Fiscal Operations and Policy 

U.S. Department of the Treasury 

1500 Pennsylvania Ave, NW, Room 2112 

Washington, DC 20220 

To the Financial Agent: 

Joseph Rossi 

Senior Vice President, Operations 

Freddie Mac 

8200 Jones Branch Drive 

McLean, VA 22102 

The party giving the notice should send an e-mail to the party receiving the notice advising that 

them that the notice by mail has been given. 
16

28. Publicity and Disclosure 

A. The Financial Agent shall not make use of any Treasury name, symbol, emblem, program 

name, or product name, in any advertising, signage, promotional material, press release, Web 

page, publication, or media interview, without the prior written consent of the Treasury. 

B. The Financial Agent, its contractors, any employee of the Financial Agent, or any contractor 

personnel shall not make statements to the media or issue press releases regarding their services 

under this FAA without the prior written consent of the Treasury. 

C. The Financial Agent acknowledges that this FAA is confidential and, consistent with 

applicable law, shall not disclose this FAA to third parties. 

29. Modifications 

Modifications to this FAA shall be in writing and signed by the parties. Notwithstanding the 

foregoing, the Treasury reserves the right to unilaterally modify the terms and provisions of this 

FAA, through written notice to the Financial Agent, to comply with changes in legislation or 

regulations, court orders, or audit findings. 

30. Miscellaneous 

A. This FAA shall be governed by, and interpreted in accordance with, Federal law not the law 

of any state or locality. To the extent that a court looks to the laws of any state to determine or 

define the Federal law, it is the intention of the parties to this FAA that such court shall look 

only to the laws of the State of New York without regard to the rules of conflicts of laws. 

B. This FAA is not a Federal procurement contract and is therefore not subject to the provisions 

of the Federal Property and Administrative Services Act (41 U.S.C. §§ 251-260), the Federal 

Acquisition Regulations (48 CFR Chapter 1), or any other Federal procurement law. 

C. Any provision of this FAA that is determined to be prohibited or unenforceable in any 

jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or 

unenforceability without invalidating the remaining provisions of this FAA, and no such 

prohibition or unenforceability in any jurisdiction shall invalidate such provision in any other 

jurisdiction. 

D. Failure on the part of the Treasury to insist upon strict compliance with any of the terms 

hereof shall not be deemed a waiver, nor will any waiver hereunder at any time be deemed a 

waiver at any other time. No waiver will be valid unless in writing and signed by an authorized 

officer of the Treasury. No failure by the Treasury to exercise any right, remedy, or power 

hereunder will operate as a waiver thereof. The rights, remedies, and powers provided herein are 

cumulative and not exhaustive of any rights, remedies, and powers provided by law. 
17

E. This FAA shall inure to the benefit of and be binding upon the parties to this FAA. No other 

person or entity will have any right or obligation hereunder, except for successor financial agents 

accepted by the Treasury. 

F. This FAA may be executed in two or more counterparts (and by different parties on separate 

counterparts), each of which shall be an original, but all of which together shall constitute one 

and the same instrument. 

G. This FAA and the attached Exhibits constitute the entire agreement between the parties. 

31. Incorporation by reference 

Exhibits A-F attached to this FAA are incorporated herein by reference and given the same force 

and effect as though fully set forth herein. 

In witness whereof, the Treasury and the Financial Agent by their duly authorized officials 

hereby execute and deliver this Financial Agent Agreement as of the Effective Date. 

Department of the Treasury 

____________________________________ ________________________ 

Kenneth E. Carfine Date 

Fiscal Assistant Secretary 

Financial Agent 

____________________________________ ________________________ 

David M. Moffett Date 

Chief Executive Officer
E. This FAA shall inure to the benefit of and be binding upon the parties to this FAA. No other

person or entity will have any right or obligation hereunder, except for successor financial agents

accepted by the Treasury.

F. This FAA may be executed in two or more counterparts (and by different parties on separate

counterparts), each of which shall be an original, but all of which together shall constitute one

and the same instrument.

G. This FAA and the attached Exhibits constitute the entire agreement between the parties.

31. Incorporation by reference

Exhibits A-F attached to this FAA are incorporated herein by reference and given the same force

and effect as though fully set forth herein.

In witness whereof, the Treasury and the Financial Agent by their duly authorized officials

hereby execute and deliver this Financial Agent Agreement as ofthe Effective Date.

Department ofthe Treasury

~creta; neth E. Carfine

Financial Agent

David M. Moffett

Chief Executive Officer

17

/

oc2/L¢9

Date
E. This FAA shall inure to the be lefit of and be binding upon the parties to this FAA. No other

person or entity will have any rig lt or obligation hereunder, except for successor financial agents

accepted by the Treasury.

F. This FAA may be executed in two or more counterparts (and by different parties on separate

counterparts), each of which shal be an original, but all of which together shall constitute one

and the same instrument.

G. This FAA and the attached E::hibits constitute the entire agreement between the parties.

31. Incorporation by reference

Exhibits A-f attached to this FA, \ are incorporated herein by reference and given the same force

and effect as though fully set fon 1 herein.

In witness whereof, the TreasUl;· and the Financial Agent by their duly authorized officials

hereby execute and deliver this F.nancial Agent Agreement as ofthe Effective Date.

Department oftbe Treasury

Kenneth E. Carline

Fiscal Assistant Secretary

Financial Agent

David . Moffett

Chief Executive Offic

17

Date

r':l

C~y ""'T {K. ).<..4
18

EXHIBITS 

Exhibit A Services and Other Terms 

Exhibit B Budget, Funding, and Compensation 

Exhibit C Program Guidelines 

Exhibit D Annual Certification Format 

Exhibit E Non-Disclosure Agreement 

Exhibit F Conflicts of Interests Mitigation 
1

EXHIBIT A 

SERVICES AND OTHER TERMS 

The Financial Agent will assist in implementing the Treasury’s Homeownership Preservation 

Program under the Emergency Economic Stabilization Act of 2008, including but not limited to 

the development, implementation, and administration of services related to foreclosure 

prevention and other miscellaneous services as set forth in this Exhibit and Exhibit C. 

The Financial Agent shall provide all services in accordance with the Program Guidelines, 

contained in Exhibit C, as issued and updated from time to time by the Treasury. 

1. Foreclosure prevention 

A. To assist the Treasury with foreclosure prevention, the Financial Agent shall provide advice 

to help design a program that implements standardized, streamlined mortgage modifications for 

all types of servicers, regardless of the risk holder (e.g., bank, PLS, GSE MBS, etc.), and that 

lowers monthly payments for qualified borrowers. 

B. The Financial Agent shall fulfill the role of compliance agent for the foreclosure prevention 

activities. Another financial agent designated by the Treasury will fulfill the roles of program 

administration, pipeline reporting, program record-keeping, and paying agent. The Financial 

Agent agrees to work in good faith and fully cooperate with the financial agent designated for 

administration, pipeline reporting, record-keeping, and paying. 

C. Acting as the program compliance agent, consistent with the Program Guidelines, the 

Financial Agent shall conduct examinations and review servicer compliance with the published 

rules for the program and report results to the Treasury. Such examinations shall be primarily 

on-site but will also involve off-site documentation reviews. Based on the examinations, the 

Financial Agent shall also provide the Treasury with advice, guidance, and lessons learned to 

improve operation of the program. 

D. The Financial Agent shall employ the following techniques and examination components, as 

determined by the Financial Agent consistent with the Program Guidelines: 

1. Verifying that a servicer’s data mining process is designed to include all eligible borrowers 

in the servicer’s loan modification program, including reviewing policies and procedures 

established by the servicer to identify eligible borrowers, and reviewing the results of 

outreach efforts the servicer has completed based on the policies and procedures. 

2. Reviewing a servicer’s use and documentation of the net present value (NPV) tool required 

to be used by the Treasury, by examining the servicer’s on-site systems and data flow 

practices and confirming that the servicer maintains appropriate documentation of its debt-toincome calculations. 
2

3. Testing whether information sent by the servicer to the program administrator is consistent 

with the servicer’s documentation, including such steps as reviewing policies and procedures 

for the NPV tool and associated data flows, testing a sample of the servicer’s loans, inputting 

a random sample of loans into the NPV tool and comparing results with those of the servicer, 

and testing data integrity by tracing a random sample of loan level data from the program 

administrator back to the source documents in servicer’s individual loan files. 

4. Reviewing the servicer’s underwriting practices by, among other things, examining physical 

loan files to check compliance with requirements such as income verification, home 

valuation and credit scoring, reviewing the servicer’s policies and procedures for 

underwriting modifications and comparing those with standard industry underwriting 

guidelines and program specifications, and selecting a random sample of approved and 

declined files and underwriting the source documents to check whether sound underwriting 

practices were followed (income calculation, collateral valuation, debt determination, etc.). 

5. Where servicers are responsible for paying out program funds, reviewing cash flow 

movement practices to check whether program funds are paid in a timely manner to the right 

parties, including such steps as reviewing the servicer’s policies and procedures for 

executing payments, examining random samples of transactions through the end-to-end 

process, and reviewing the servicer’s investor account reconciliations. 

6. Reviewing the servicer’s record keeping practices for transactions and program decisions, 

such as determinations of borrower eligibility, including such steps as reviewing the 

servicer’s policies and procedures against program specifications and industry standards, 

randomly testing approved and declined loans and their associated records to determine 

whether procedures and documentation requirements were followed, and reviewing servicer 

records agree with the program record keeper. 

E. The Financial Agent shall to report its findings to the Treasury for each examination using a 

standard reporting template, to be developed by the Treasury with input from the Financial 

Agent, which shall include such information in memorandum format as: overall rating (e.g., 

satisfactory, marginal, poor), major risk and compliance findings if any, narrative justifying the 

rating, descriptions of the key processes employed by the servicer, and compliance testing 

results. 

F. The Financial Agent shall provide its findings on the reporting template to the Treasury, and 

to the program administrator at the direction of the Treasury, either for each examination or a 

sample of examinations based on the severity of diversions from program requirements, 

consistent with the Program Guidelines. 

G. As requested by the Treasury, the Financial Agent shall work with the program administrator 

and the Treasury to provide information, agreements, and training to servicers and borrowers and 

to answer program inquiries. 
3

2. Housing Finance Agencies 

Services To Be Determined

3. Whole loan purchases out of PLS trusts 

Services To Be Determined 

4. Miscellaneous services 

A. The Financial Agent shall provide various miscellaneous services upon the Treasury’s 

reasonable request and the Financial Agent’s reasonable consent, including but not limited to the 

following services: 

1. Provide consultative advice on other activities in the Treasury’s Homeownership 

Preservation Program. 

2. Provide advice to the Treasury on managing the property disposition for real estate acquired 

through foreclosure. 

3. Assist in the selection of special technical advisors for any of the activities referred to herein. 

4. Provide analysis and modeling for any of the activities referred to herein. 
1

EXHIBIT B 

BUDGET, FUNDING, AND COMPENSATION 

1. Budget and compensation 

A. The Treasury, in consultation with the Financial Agent, shall establish and from time to time 

update a budget for the services to be provided under the Financial Agency Agreement (FAA), 

based on factors including level of resources required to perform services, standards of care to be 

met, compliance policies required to administer the program, and other FAA requirements, 

consistent with the Program Guidelines. The following major cost categories will be used for the 

budget: 

• Personnel compensation and related costs 

• Travel 

• Information technology 

• Equipment and materials 

• Contractors and other third party providers 

• Other specific, direct costs 

• Indirect costs 

B. The Financial Agent shall be reimbursed for the costs of administering the program, 

consistent with the budget. Such reimbursement will be paid monthly based on services 

rendered the prior month. The Financial Agent must submit an invoice, with breakdowns under 

each major cost category, prior to receiving such reimbursement. 

2. Incentive payments 

A. The Financial Agent may receive performance incentive payments, up to a maximum level of 

20 percent of base compensation, at the Treasury’s discretion and sole determination based on 

the quality and timeliness of compliance examinations and the advice, guidance, and lessons 

learned that may improve operation of the program and help the Treasury achieve 

homeownership policy goals. 

B. Such performance payments will be paid quarterly based on the Treasury’s evaluation of 

results from the prior quarter. 
1

EXHIBIT C 

PROGRAM GUIDELINES 

To Be Issued by the Treasury 
1

EXHIBIT D 

ANNUAL CERTIFICATION FORMAT 

This certificate is delivered as provided in Section 13 of the Financial Agency Agreement (FAA) 

effective February 18, 2009, between the U.S. Department of the Treasury (the Treasury) and 

[Financial Institution name]. 

I, [Name of Authorized Official], a duly authorized official of [Financial Institution name], 

certify that: 

1. [Financial Institution name] is an institution established and regulated under the laws of the 

United States or any State, territory, or possession of the United States and having significant 

operations in the United States; 

2. [Financial Institution name] is taking all reasonable steps to ensure that nonpublic 

information obtained from or on behalf of the Treasury are properly safeguarded, in 

accordance with the FAA and 31 CFR Part 31, as may be amended from time to time; 

3. all charges and expenses charged to the Treasury are accurate and attributable to services 

provided to the Treasury; 

4. [Financial Institution name] is not on any Federal excluded parties, debarments, or 

suspension lists; 

5. [Financial Institution name] is not delinquent on any federal tax obligation or on any other 

debt owed to the United States and that [Financial Institution name] agrees to execute IRS 

Form 8821, and any other necessary Federal forms, to allow the Treasury to verify such 

information; 

6. [Financial Institution name] has all governmental approvals or registrations required under 

law to authorize the performance of its obligations under the FAA, and is not aware of any 

legal or financial impediments to performing its obligations to the Treasury; 

7. all employees of [Financial Institution name] and contractor personnel who have access to 

nonpublic information are U.S. citizens or lawful permanent residents performing their work 

in the continental United States, unless specifically authorized by the Treasury in writing; 

8. [Financial Institution name] covenants to disclose all actual or potential organizational 

conflicts of interest, including conflicts with the interests of any contractors performing 

services under the FAA, and to avoid, mitigate, or neutralize to the extent feasible and to the 

Treasury’s satisfaction any personal or organizational conflicts of interest that may be 

identified by the Treasury or [Financial Institution name], in accordance with the FAA and 

31 CFR Part 31, as may be amended from time to time; 

9. in accordance with the FAA and 31 CFR Part 31, as may be amended from time to time, 

[Financial Institution name] covenants to disclose to the Treasury Inspector General or the 

Special Inspector General created under the Act any credible evidence, in connection with 

the designation, services, or closeout of this FAA, that a management official, employee, or 

contractor of the [Financial Institution name] has committed (a) a violation of Federal 

criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 

18 of the United States Code, or (b) a violation of the civil False Claims Act (31 U.S.C. §§ 

3729-3733). 
2

10. [Financial Institution name] covenants to disclose any other facts or information that the 

Treasury should reasonably expect to know about the [Financial Institution name] and its 

contractors to help protect the reputational interests of the Treasury and [Financial Institution 

name] in managing the Program. 

11. any other representations and warranties embodied by or contained in the FAA, and any 

amendments thereto, either remain true and correct or have been otherwise disclosed. 

In the event that any of the representations made herein cease to be true and correct, [Financial 

Institution name] agrees to notify the Treasury immediately. 

____________________________________ ________________________ 

[Name of Authorized Official] Date 

[Title of Authorized Official] 
1

EXHIBIT E

NON-DISCLOSURE AGREEMENT 

Conditional Access to Nonpublic Information

I, _______________________________________, employee of ____________ (Organization) 

hereby consent to the terms in this Agreement in consideration of my being granted conditional 

access to certain United States Government nonpublic information. 

I understand and agree to the following terms and conditions: 

1. By being granted conditional access to nonpublic information, the ________ (Organization) 

and the U.S. Department of the Treasury (Treasury) have placed special confidence and trust 

in me, and I am obligated to protect this information from unauthorized disclosure, according 

to the terms of this Agreement. 

2. Nonpublic information refers to any information, provided to me by the Treasury or 

__________ (Organization) in connection with my authorized services to the Treasury, or 

that I obtain or develop in providing authorized services to the Treasury, other than 

information designated as publicly available by the Treasury in writing or that becomes 

publicly available from a source other than the Financial Agent. Nonpublic information 

includes but is not limited to information about the Treasury’s business, economic, and 

policy plans, financial information, trade secrets, information subject to the Privacy Act, 

personally identifiable information (PII) , and sensitive but unclassified (SBU) information. 

3. PII includes, but is not limited to, information pertaining to an individual’s education, bank 

accounts, financial transactions, medical history and other information which can be used to 

distinguish or trace an individual’s identity, including but not limited to social security 

numbers. 

4. SBU information is any information where the loss, misuse, or unauthorized access to, or 

modification of which could adversely affect the national interest or the conduct of Federal 

programs, or the privacy of individuals that they are entitled to under the Privacy Act and 

other Federal statutes. 

5. I am being granted conditional access to nonpublic information, contingent upon my 

execution of this Agreement, to provide authorized services to the Treasury. 

6. Except as set forth in paragraph 14 below, I shall never divulge any nonpublic information 

provided to me pursuant to this Agreement to any third party, unless I have been advised in 

writing by the _______ (Organization) and/or the Treasury that such party is authorized to 

receive it. 
2

7. I will submit to the Treasury for security review, prior to any submission for publication, any 

book, article, column or other written work for general publication that is based upon any 

knowledge I obtain during the course of my work in connection with the Treasury. I hereby 

assign to the Federal Government all rights, royalties, remunerations and emoluments that 

have resulted or will result or may result from any disclosure, publication, or revelation of 

nonpublic information not consistent with the terms of this Agreement. 

8. If I violate the terms and conditions of this Agreement, I understand that the unauthorized 

disclosure of nonpublic information could compromise the security of individuals, the 

__________ (Organization) and the Treasury. 

9. If I violate the terms and conditions of this Agreement, such violation may result in the 

cancellation of my conditional access to nonpublic information. Further, violation of the 

terms and conditions of this Agreement may result in the __________ (Organization) and/or 

the United States taking administrative, civil or any other appropriate relief. 

10. I understand that the willful disclosure of information to which I have agreed herein not to 

divulge may also constitute a criminal offense. 

11. Unless I am provided a written release by the Treasury from this Agreement, or any portions 

of it, all conditions and obligations contained in this Agreement apply both during my period 

of conditional access, and at which time my affiliation and/or employment with the 

____________ (Organization) ends. 

12. Each provision of this Agreement is severable. If a court should find any provision of this 

Agreement to be unenforceable, all other provisions shall remain in full force and effect. 

13. I understand that the Treasury may seek any remedy available to it to enforce this 

Agreement, including, but not limited to, application for a court order prohibiting disclosure 

of information in breach of this Agreement. 

14. I understand that if I am under U.S. Congressional or judicial subpoena, I may be required by 

law to release information. 

I make this Agreement in good faith, without mental reservation or purpose of evasion. 

______________________________ _______________________ 

Signature Date 
F-1

 EXHIBIT F 

CONFLICTS OF INTEREST MITIGATION 

The following explains and memorializes certain of the conflicts of interest mitigation 

controls the Financial Agent shall implement and monitor throughout the term of this 

FAA. As used in this Exhibit, "Program" refers to the Foreclosure Prevention Program 

described in this FAA and in Exhibit A to this FAA.

Conflicts of Interest

The following have been identified as actual or potential conflicts of interest associated 

with the Financial Agent providing services under this FAA: 

1. The Financial Agent owns a proprietary portfolio of securities and loans, and 

guarantees that principal and interest payments will be passed through to other 

investors that own mortgage backed securities. A potential conflict exists between 

the Financial Agent's interest in maximizing the performance and minimizing the 

costs of its retained and guaranteed portfolios and the Financial Agent's responsibility 

to the Treasury to administer the Program uniformly for all borrowers and investors 

across the country. 

Examples of this potential conflict include: (a) traders working on the Financial 

Agent's mortgage desk could make use of Program information on investors, 

servicers, and borrowers, (b) personnel with knowledge of the Financial Agent's 

portfolio may be more lenient in auditing servicers connected with the portfolio, and 

(c) personnel providing the Treasury with audit results and advice about servicer 

compliance with Program requirements could provide self-serving advice that would 

create an advantage for the Financial Agent's portfolio. 

2. The Financial Agent maintains business relationships with lenders and servicers from 

which it purchases mortgages and upon which it is reliant to fulfill its core business 

and statutory mission. Therefore, a potential conflict exists between the Financial 

Agent's need to maintain beneficial relationships with servicers supplying product 

and the Financial Agent's duty to the Treasury to administer the Program uniformly 

and to enforce servicer compliance with Program Guidelines. 

3. As the owner of and investor in mortgages and mortgage backed securities, the 

Financial Agent may be an ultimate beneficiary of the interest and principal reduction 

payments and loan modifications carried out under the Program. A potential conflict 

exists between the Financial Agent's interest in benefiting from the interest and 

principal reduction payments and mitigating foreclosures of mortgages in its own 

portfolio and its duty to the Treasury to administer the Program uniformly for all 

investors and to assist the Treasury to enforce compliance by all servicers under the 

Program. 
F-2

4. Individuals employed by or associated with the Financial Agent may have a financial 

interest in servicers or investment funds that could receive or benefit from the interest 

and principal reduction payments under the Program. Because these individuals may 

have material, non-public information and may make decisions about the execution of 

the Program, their duties could have a direct effect on their financial interests. A 

potential conflict exists between their desire to represent their own financial interests 

versus the interests of the Treasury. 

Mitigation Plans

As a fiduciary of the Treasury, the Financial Agent owes a duty to look solely to the best 

interests of the Treasury without considering the interests of other clients or its own 

proprietary interests. Given actual or potential conflicts of interest with respect to 

providing services under this FAA, the Financial Agent agrees to implement the 

following mitigation plans and conflict of interest mitigation controls.

Conflict of Interest #1: The Financial Agent's Proprietary Portfolio 

To address concerns that the Financial Agent may unduly favor its proprietary interests at 

the expense of the Treasury in performing services under this FAA, the Financial Agent 

agrees to do the following: 

1. The Financial Agent will implement a structure designed to prevent use by the 

Financial Agent of non-public information obtained or developed pursuant to this FAA 

for the advantage of its own business at the expense of the Treasury or others. As a result 

of providing services pursuant to this FAA, some individuals within the Financial Agent 

and among its contractors may acquire access to material non-public information such as: 

o Individual mortgages and pools of mortgages modified under the Program 

o The terms of such modifications 

o The performance of such modifications 

o The performance of mortgage servicers participating in the Program 

Such information received as a result of performing services under this FAA is referred to 

below as "Non-Public Program Information". Non-Public Program Information is 

“material” if there is a substantial likelihood that a reasonable person would consider the 

information important in making an investment decision. 

When an employee of the Financial Agent or of one of its contractors is in possession of 

Material Non-Public Program Information, the individual shall be considered a “TARP 

Restricted Person” with respect to the Program. The Financial Agent shall maintain a list 

of all such individuals, including the individuals' names and titles and the dates they 

became TARP Restricted Persons, as well as the date of removal of each from the list. 

Contracts between the Financial Agent and its contractors shall require that each 

contractor identify all TARP Restricted Persons to the Financial Agent when they 
F-3

become TARP Restricted Persons and provide the foregoing information about each such 

TARP Restricted Person. 

Throughout the term of this FAA, TARP Restricted Persons shall not be assigned to, 

participate in, or provide access to Material Non-Public Program Information to persons 

in, the following areas of the Financial Agent's business: 

o Purchasing of or trading in mortgage-related securities 

o Purchasing of or trading in mortgages 

o Determination of the eligibility of mortgage originators, sellers or servicers to 

do business with the Financial Agent 

o Assessment of the performance of mortgage sellers or servicers under their 

contracts with the Financial Agent 

2. The Financial Agent’s management, performance, and accounting systems employed 

in rendering services under this FAA will be designed to restrict access to non-public 

information about the Program to individuals who are performing services under this 

FAA and therefore have a need to know such information. Paper files that include such 

non-public information will also be appropriately segregated so as to limit access to 

individuals who are performing services under this FAA and therefore have a need to 

know the information contained in the files. Any information technology systems utilized 

by the Financial Agent in the performance of services under this FAA that may contain 

such non-public information shall have appropriate administrative, technological and/or 

physical security controls to help ensure that access to such non-public information is 

limited to individuals who are performing services under this FAA and therefore have a 

need to know such information. 

3. The Financial Agent shall maintain and enforce a Corporate Information Wall Policy 

that prevents the flow of material nonpublic information within the corporation to 

Financial Agent employees who purchase and sell mortgage securities in the secondary 

market (these employees are called Restricted Persons in the Policy, not to be confused 

with "TARP Restricted Persons" in this Exhibit). The Policy shall specifically prohibit 

the sharing of non-public loan level information with Restricted Persons or providing 

them data access to such information. Financial Agent employees shall have training on 

this Policy. Employees shall certify annually that they have followed the Financial 

Agent’s Code of Conduct (which certification shall include compliance with the 

Information Wall Policy, the Confidentiality of Information Policy, and other corporate 

policies containing controls to avoid conflicts of interests). 

4. The Financial Agent will establish a separate business group to conduct audits and 

reviews of Servicers that will be staffed, but not necessarily managed, by employees 

dedicated to providing services under the FAA. Because the Financial Agent will be 

expected to begin performing services under the FAA in the very near future, such 

separation may not be possible initially, but the Financial Agent will work to achieve 
F-4

such separation as soon as is practicable, but not later than ninety days from the effective 

date of this FAA. 

5. The Financial Agent’s Corporate Compliance Division ("Corporate Compliance") will 

administer the requirements of the information walls referred to in paragraphs 1-3 above, 

including appropriate testing by Corporate Compliance or by the Financial Agent's 

Internal Audit Division ("Internal Audit") to determine compliance with the above 

information wall restrictions, and shall identify instances of noncompliance and 

recommend appropriate corrective action. 

6. The Financial Agent will require all employees and contractors assigned to perform 

services for the Program, other than General Service Personnel (as defined below), to 

attend a training session at which the above policies and their importance will be 

explained and emphasized. 

Notwithstanding paragraphs 1-6 above: 

(a) The following individuals and their successors shall not be regarded as TARP 

Restricted Persons because (i) their expertise is essential to the performance of the 

Financial Agent's duties under this FAA, particularly with regard to providing 

technical assistance and advice to the Treasury and (ii) they are essential to the 

conduct of the Financial Agent's own business and cannot be excluded from it: 

, Senior Vice President, Single Family Guarantee 

, Chief Credit Officer 

, Senior Vice President, Operations 

, Senior Vice President, Default Asset Management 

, Director, Single Family Change Management 

These persons shall be deemed to be “over the information wall,” and will be 

trained by the Corporate Compliance Division on their responsibilities with 

respect to Non-Public Program Information. The Financial Agent may designate 

additional persons as “over the information wall” with prior written approval from 

the Treasury Department. 

(b) General Service Personnel will not be considered TARP Restricted Persons. 

The term "General Service Personnel" means personnel who have access to 

information and data related to the Program (including in some cases Material 

Non-Public Program Information) as a result of technical, administrative or 

operational duties they perform for the Financial Agent that support the Financial 

Agent's services under this FAA but do not involve direct performance of those 

services. General Services Personnel may obtain or have access to information 

about the Program incidental to the performance of their duties for the Financial 

Agent. Examples of General Service Personnel include (i) data base 
F-5

administrators and other technical personnel, (ii) human resources personnel, (iii) 

contracting personnel, (iv) call center personnel, and (iv) legal and compliance 

personnel. 

With respect to the potential risk of leniency toward servicers connected with the 

Financial Agent's portfolio, see Conflict #2. 

Conflict of Interest #2: Maintenance of Relationships with Sellers and Servicers of 

Mortgages 

This potential conflict may occur if the Financial Agent’s objectivity in performing 

services for Treasury is impaired by extraneous considerations, such as the Financial 

Agent's business relationships with mortgage sellers and servicers. The Financial Agent 

will mitigate these risks by means of the following measures: 

1. The Financial Agent will adopt an internal policy, to be approved by the Treasury 

Department, establishing the principles that, in the performance of the Financial Agent's 

services under this FAA, (a) all decisions are to be made solely based on the objectives 

and applicable requirements of the program and that the program is to be administered 

uniformly, and (b) employees of the Financial Agent are not to consider (i) potential 

benefit to either mortgage sellers or mortgage servicers with whom the Financial Agent 

does business or (ii) potential benefit to the Financial Agent from modification of 

mortgages that it owns or that back Mortgage Participate Certifications that it has 

guaranteed. The Financial Agent will submit a draft of the policy to the Treasury 

Department within 30 days after the execution of this FAA. 

The Financial Agent will require all employees and contractors performing services 

under this FAA, other than General Service Personnel, to attend a training session at 

which the above policy and its importance will be explained and emphasized. 

2. Audits of servicers will be conducted in accordance with written audit procedures, 

copies of which the Financial Agent will provide to the Treasury Department upon 

request. This requirement will limit (though it cannot totally eliminate) the exercise of 

discretion in the audit process and hence the latitude of auditors to treat one servicer more 

leniently than another. 

3. The Financial Agent's process for audits or other reviews of the performance of 

mortgage servicers will provide that all results of such audits or reviews will be approved 

by at least one supervisory employee of the Financial Agent before being delivered to the 

affected servicers or to the Treasury. 

4. All audits or reviews will be provided to the Treasury Department 5 business days 

before distribution to the subject servicer. 
F-6

In addition to these measures, Treasury retains the right under this FAA to oversee and 

audit the Financial Agent’s performance. 

Conflict of Interest #3: Benefit of interest and principal reduction payments 

To mitigate this concern, the Financial Agent will implement the information barriers 

discussed under Conflict of Interest #1, and those mitigation controls listed in the last 

section of this exhibit. These measures are designed to prevent Program Employees from 

knowing whether the Financial Agent has an interest in a mortgage backed security 

affected by the Financial Agent’s work under this FAA. This concern will be further 

mitigated by the following: 

1. The Financial Agent will establish controls designed to ensure that employees 

rendering services under this FAA will not have access to non-public records containing 

information identifying mortgage-backed securities that the Financial Agent owns, and 

thus will be unable to determine whether interest and principal reduction payments paid 

with respect to audited modification transactions were received by the Financial Agent. 

Paper files that include such information will be appropriately segregated to help ensure 

that access to such information is not available to employees performing services under 

this FAA. Information technology systems containing such information will have 

appropriate administrative, technological and/or physical security controls to help to help 

ensure that access to such information is not available to employees performing services 

under this FAA. (A mortgage servicer's files do not include information about the 

ownership of mortgage-backed securities backed by a given mortgage.) 

2. The Financial Agent anticipates that clear Program rules will govern the calculation 

and payment of the interest and principal reduction payments, which will limit (though 

they cannot totally eliminate) the exercise of discretion in the audit process and hence the 

latitude of auditors to be more lenient in auditing modification transactions that have 

resulted in interest and principal reduction payments to the Financial Agent. 

3. Audits of servicers will be conducted in accordance with written audit procedures, 

copies of which the Financial Agent will provide to the Treasury Department upon 

request. This requirement will limit (though it cannot totally eliminate) the exercise of 

discretion in the audit process and hence the latitude of auditors to be more lenient in 

auditing modification transactions that have resulted in interest and principal reduction 

payments to the Financial Agent. 

4. Interest and principal reduction payments received by the Financial Agent shall not be 

a factor directly influencing the compensation of auditing employees (although the 

general profitability of the Financial Agent's entire business could be such a factor). 

5. The Financial Agent will also adopt an internal policy, to be approved by the Treasury 

Department, that establishes the principles that, in the performance of the Financial 

Agent's services under this FAA, (a) all decisions are to be made solely based on the 

objectives and applicable requirements of the program and that the program is to be 

administered uniformly, and (b) employees of the Financial Agent are not to consider 
F-7

potential benefit to the Financial Agent from modification of mortgages that it owns or 

that back mortgage-backed securities that the Financial Agent owns or has guaranteed. 

The financial agent will submit a draft of the policy to the Treasury Department within 30 

days after the execution of this FAA. The Financial Agent will require all employees and 

contractors performing services under this FAA, other than General Service Personnel, to 

attend a training session at which the above policy and its importance will be explained 

and emphasized. 

Conflict of Interest #4: Personal Conflicts of Interest

To address this concern, the Financial Agent agrees that all management officials 

performing work under this FAA and key individuals, as defined in 31 C.F.R. §31.201, 

shall be subject to a code of ethics and associated insider trading policy. In particular, all 

management officials performing work under this FAA and key individuals, as defined in 

31 C.F.R. §31.201, shall disclose on a quarterly basis information described in 31 C.F.R. 

§31.212(b). The parties do not anticipate that this FAA concerns the acquisition, 

valuation, management or disposition of troubled assets. In addition, unless an 

investment is exempt from prior notification, investments by such individuals must be 

pre-cleared by the Financial Agent’s Compliance Department and be subject to 

appropriate trading restrictions. 

When this FAA was executed, the Financial Agent represented that its internal policies 

included in the following provisions: 

General Financial Interest conflicts Policies 

The Financial Agent’s Code of Conduct for Employees states: “In addition to complying 

with policies addressing insider trading and window periods,1

 we will not hold any 

investment that may cause us to have a conflict to interest with [the Financial Agent].” 

The Code of Conduct can be found at: 

http://www.freddiemac.com/governance/codes_of_conduct/employee/. 

Conflicts training for employees performing services under this FAA will remind 

employees of their obligation in this regard and confirm that this prohibition applies to 

investments that conflict with the performance of their duties under this FAA. 

In addition to the Code of Conduct, the Financial Agent maintains a Personal Securities 

Investments Policy and an Insider Trading Policy. The Personal Securities Investment 

Policy sets out specific rules that impose certain limits on trading where a conflict of 

interest (or the appearance of such a conflict) may exist. 

 

 

1

 The reference to window periods relates to trading in stock of the Financial Agent. 
F-8

The Financial Agent also has in place policies prohibiting insider trading which provide 

that if “you possess nonpublic information about [the Financial Agent] or any other 

company that is material with respect to [the Financial Agent] or that company (in other 

words, information that could affect the market price for the company’s securities)” then 

“you may not purchase or sell that company’s securities until such information has been 

effectively disclosed to the public.” Employees receive training on each of the policy 

documents described in this section. 

Pre-Clearance of Trades 

The Personal Securities Investments Policy (referenced above) requires certain 

employees to receive pre-approval from Corporate Compliance prior to executing certain 

personal securities transactions. 

 Pre-trade approval employees receive quarterly reminders of 

their responsibilities under the policy. The Financial Agent intends to expand the list of 

pre-approval employees to include employees designated to perform services under this 

FAA, except for General Service Personnel. 

Annual Code of Conduct Questionnaire and Attestation 

During the first quarter of each calendar year, all active Financial Agent employees are 

required to complete an Annual Code of Conduct Questionnaire and Attestation. 
F-9

 

Corporate Information Wall 

The Financial Agent maintains and enforces a Corporate Information Wall Policy that 

prevents the flow of material nonpublic information within the corporation to Financial 

Agent employees who purchase and sell mortgage securities in the secondary market 

(these employees are called Restricted Persons in the Policy, not to be confused with 

"TARP Restricted Persons" in this Exhibit). The Policy specifically prohibits the sharing 

of non-public loan level information with Restricted Persons or providing them data 

access to such information. Financial Agent employees have training on this Policy and 

are well aware of its prohibitions. Employees certify annually that they have followed 

the Financial Agent’s Code of Conduct (which certification includes compliance with the 

Information Wall Policy, the Confidentiality of Information Policy, and other corporate 

policies containing controls to avoid conflicts of interests). 

General Conflicts of Interest Mitigation Controls 

The Financial Agent shall maintain and enforce corporate-wide policies and procedures 

generally addressing potential conflicts of interest, as follows: 

• Controls over IT and Paper Files Related to Non-Public Information. The Financial 

Agent’s management, performance, and accounting systems will be designed to 

restrict access to non-public information about the Program to those individuals who 

have a need to know such information. Paper files that include such non-public 

information will also be appropriately segregated so as to avoid inappropriate access 

by unauthorized individuals. Any information technology systems utilized by the 

Financial Agent in the performance of services under this FAA that may contain such 

non-public information shall have appropriate administrative, technological and/or 

physical security controls to help ensure that access to such non-public information is 

limited to those individuals who have a need to know such information. Individuals 

in possession of non-public information obtained or developed pursuant to the FAA 

shall not act, or cause others to act, on such information, except in performance of 

this FAA. 

• Training. All management officials and key individuals associated with the Financial 

Agent performing services under this FAA shall be required to participate in 

compliance training within 60 days after the Financial Agent commences providing 

services under this FAA and annually as long as they continue to provide such 

services. The training program shall inform and advise each individual of their 

obligations and requirements under this FAA. 
F-10

• Monitoring / Compliance. Corporate Compliance or Internal Audit will monitor the 

Financial Agent's compliance with the provisions of Exhibit F and the conflict of 

interest regulations at 31 C.F.R. Part 31. They shall document such internal oversight 

and provide Treasury with quarterly reports sufficient to evaluate the compliance. 

Any breaches or violations of the conflict of interest mitigation controls or other 

requirements of the FAA shall be documented in an incident report and promptly 

provided to the Office of Financial Stability Chief Compliance Officer. Corporate 

Compliance is headed by the Senior Vice President – Compliance and Regulatory 

Affairs and Chief Compliance Officer, who reports directly to the CEO. Internal 

Audit is headed by the Senior Vice President and General Auditor, who also reports 

directly to the CEO. 

• Limitations on Communications with Employees of the Treasury. During the term of 

this FAA, the Financial Agent shall not knowingly directly or indirectly make any 

offer or promise of future employment or business opportunity to, or knowingly 

engage directly or indirectly in any discussion of future employment or business 

opportunity with, any Treasury employee with personal or direct responsibility for the 

Program. The Financial Agent shall not offer, give, or promise to offer or give, 

directly or indirectly, any money, gratuity, or other thing of value to any employee of 

the Treasury, except as permitted by Government-Wide Ethics Rules, 5 C.F.R. part 

2635. The Financial Agent shall not solicit or obtain from any Treasury employee, 

directly or indirectly, any information that is not public and was prepared for use by 

the Treasury for the purpose of evaluating a bid, proposal, or offer to enter into an 

agreement, except as appropriate to perform services under this FAA. 

• Certifications

o Organizational Conflicts of Interest Certification. The Financial Agent shall 

quarterly certify in writing to the Treasury that it has no organizational 

conflicts of interest, or explain in detail the extent to which it can certify, and 

describe the actions it has taken and plans to take to mitigate these conflicts. 

o Personal Conflicts of Interest Certification. All management officials and key 

individuals performing services under this FAA shall certify quarterly to the 

Treasury that he or she has no personal conflicts of interest, or are subject to a 

mitigation or waiver plan approved by the Treasury. 

o Communications with Treasury Employees Certification. For the process of 

selecting a financial agent for this FAA and prior to entering into a new 

agreement with the Treasury, or accepting modifications to an existing 

agreement, the Financial Agent shall certify that it is aware of the prohibitions 

on communications with Treasury employees, as described above, and that, to 

the best of its knowledge after making reasonable inquiry, the Financial Agent 

has no information concerning a violation or possible violation of those 

prohibitions. 
F-11

o Confidentiality Certification. All management officials and key individuals 

providing services under this FAA shall certify quarterly to Corporate 

Compliance that he or she will comply with the requirements of this FAA and 

31 C.F.R. § 31.217 to not share non-public information (as that term is 

defined in Section 6 of this FAA) with any unauthorized person or entity. 

• Reviews. The Treasury, on its own behalf or through an entity contracted by the 

Treasury, may conduct an annual or ad hoc review of the compliance of the Financial 

Agent with all conflicts of interest and confidentiality obligations and responsibilities 

set forth in this FAA. The Financial Agent shall cooperate fully with the Treasury or 

its designated representative and provide it with any and all such information (in 

whatever form) requested by it in order to perform such a review. Additional reviews 

may be conducted by oversight bodies with explicit authority over the Program, 

including the Office of the Special Inspector General for the Troubled Asset Relief 

Program and the U.S. Government Accountability Office. The Financial Agent shall 

cooperate fully with the Treasury or its designated representative and provide it with 

whatever information in whatever form requested by it in order to perform such 

review. Certain of such information may constitute confidential commercial 

information of the Financial Agent and will be treated as such by the Treasury and by 

its designated representatives, to the extent permitted by law. 

• Point of Contact. The OFS CCO shall be the contact official at the Treasury 

responsible for monitoring compliance with this Exhibit. 

• Changes to Conflicts of Interest Mitigation Controls. The Financial Agent and the 

Treasury agree that the Program's objectives and policies, as well as the Financial 

Agent’s business, are likely to evolve over the term of the TARP. The Financial 

Agent shall inform the Treasury and negotiate in good faith all proposed material 

changes to the above conflicts of interest mitigation controls prior to their adoption 

and Treasury retains the option of disapproving any proposed material change, in 

which case the Financial Agent agrees not to change such control. The Financial 

Agent and the Treasury agree to negotiate and resolve any such proposed changes in 

good faith and as quickly as reasonably possible. In addition, the Financial Agent 

shall promptly notify the Treasury of any changes to the Code of Conduct of the 

Financial Agent.