Freddie Mac Exclusionary List, Lessons Learned
I first discovered the Freddie Mac Exclusionary List years ago while preparing for a Realtor seminar on the topic of Realtor liability. Put simply, when Freddie Mac believes that you have done something to cause harm to the company, they will put you on their Exclusionary List – preventing you from participating in a real estate transaction where Freddie Mac is a party. What we’ve learned is that many mortgage servicers will also access the List and prevent you from doing closings with them.
We’ve helped many professionals come off the List – Realtors, mortgage originators, appraisers, inspectors, attorneys, title companies, real estate investors and others. We’ve even helped someone who was unable to buy a house using Freddie Mac financing because she was on the List for doing simultaneous closings years before. There is no “statute of limitations” that we can find. Once you’re on the List, it is forever, unless or until you ask and Freddie Mac agrees to take you off. While we do NOT have a 100% success rate, we have helped many people off the List (we’ve had way more successes than failures), and from our successful and unsuccessful cases, we’ve learned some lessons along the way:
- DO explain to Freddie Mac that you understand why you’re on the List and explain how you’ve changed your policies or procedures to avoid engaging in similar conduct in the future.
- DO show Freddie Mac evidence that you’ve completed continuing education in your industry – especially if that continuing education is aimed at the issues that caused you to go on the List.
- DO get letters of recommendation from others in the real estate industry that speak to the specific issues that caused you to get on the List. You can also include “feel good” letters from the community (like your religious leader) but we find industry-related letters to be more effective.
- DO provide as much information as possible.
- DO argue why you believe that you should not be on the List, however spend a majority of your argument on why you should come off of the List.
- DON’T spend the majority of your argument re-hashing why you should not be on the List. You’re on the List; argue why you should come off.
- DON’T send in a letter with missing information or documentation. Freddie Mac is typically looking for a reason to take you off the List in most cases, so give it to them!
- DON’T blame others for mistakes. This shows Freddie Mac that you lack controls for company or for the people you supervise.
One frustration with the process is that Freddie Mac will simply reply that you are, or are not, off the List, without explanation. Freddie Mac doesn’t publish much about the Exclusionary List. Accordingly, many of the Do’s and Don’ts above are from trial and error.
One last lesson I’ve learned – like a former boss of mine used to say, “Does your submission pass the ‘weight test?'” In other words, the more positive information you send Freddie Mac, the more likely you are to come off the List.
For more information on the Freddie Mac Exclusionary List, or if you find yourself on the List, please contact us to schedule a free initial consultation to discuss your options at 813-774-5737 or email me directly at firstname.lastname@example.org. Please also subscribe to the Crushing Debt Podcast, on Apple Podcasts, Spotify, and other podcast players, including Amazon Echo (“Alexa”) for more free information about these topics.
Shawn M. Yesner, Esq., is the host of the Crushing Debt Podcast and founder of Yesner Law, P.L., a Tampa-based boutique real estate and consumer law firm that helps clients eliminate the financial bullies in their lives. We assist clients with asset protection, the sale and purchase of real property, Chapter 7 liquidation, Chapter 13 reorganization, bankruptcy, foreclosure defense, debt settlement, landlord/tenant issues, short sales, and loan modifications in Tampa, Westchase, Odessa, Oldsmar, Palm Harbor, Clearwater, Pinellas Park, Largo, St. Petersburg, and throughout the greater Tampa Bay area.