Freddie Mac’s AI Requirements Take Effect March 3, 2026 – Are You Ready?
The Federal Home Loan Mortgage Corporation (Freddie Mac) is raising the bar on how approved Seller/Servicers govern artificial intelligence and machine learning (AI). Effective March 3, 2026, Freddie Mac’s Seller/Servicer Guide Section 1302.8 will move beyond basic policy requirements and into a clear expectation: approved mortgage companies must operate an auditable AI governance program.
If your organization uses AI or machine learning anywhere in the origination of Freddie Mac–eligible loans or in servicing Freddie-backed mortgages, this change warrants executive-level attention well in advance of the effective date.
What Is Changing in Section 1302.8?
Today, Section 1302.8 focuses primarily on compliance with applicable law and Freddie Mac Purchase Documents, along with indemnification obligations tied to the Seller/Servicer’s use of AI. Beginning March 3, 2026, Freddie Mac adds a third, and far more operational, requirement: a formal AI governance framework.
The updated Guide language requires Seller/Servicers to establish enterprise-wide controls for mapping, measuring, and managing AI-related risks. These controls must address such areas as performance monitoring, security vulnerabilities, and bias, and must be supported by documented roles, responsibilities, and escalation paths. Freddie Mac also expressly contemplates internal and external audits and alignment with recognized security frameworks such as NIST 800-53 and ISO 27001.
Why Does This Matter for Mortgage Banking Leadership?
This update is not limited to underwriting engines or credit decisioning models. Freddie Mac’s framing applies broadly to any AI or machine learning used in connection with loan origination or servicing. That includes vendor tools embedded in document processing, fraud detection, quality control, customer communications, and other operational workflows.
For mortgage executives, is the risk theoretical? Clearly, no. The new governance expectations increase exposure to findings if AI usage is undocumented, poorly monitored, or misaligned with stated policies. They also heighten the importance of clear ownership and oversight across compliance, risk management, and technology functions.
What Should a Mortgage Company Be Doing Now?
First, leadership teams should direct an enterprise-wide inventory of AI and machine learning tools. This includes internally developed models and third-party vendor solutions with embedded AI functionality. Each use-case should have a documented business purpose, defined owner, and clear connection to origination or servicing activities.
Second, companies should formalize governance structures. Freddie Mac’s new framework anticipates defined accountability, segregation of duties, training, and communication lines to manage AI risk. This often requires deciding which executive function owns AI risk and how decisions regarding deployment and change management are approved.
Third, organizations should begin preparing for audit readiness. That means implementing monitoring for model performance, security events, and potential bias, assessing AI-specific threats such as data poisoning and adversarial inputs, and documenting audit cadence and remediation processes.
What’s the Bottom Line?
Effective March 3, 2026, Freddie Mac’s update to Section 1302.8 reflects a clear regulatory direction: AI governance is becoming a core Seller/Servicer obligation. Mortgage companies that wait to address these expectations may find themselves reacting under pressure. Those that act now will be better positioned to demonstrate compliance, manage risk, and avoid disruption to their Freddie Mac relationship.
For assistance evaluating AI usage, updating governance frameworks, or preparing for Freddie Mac compliance reviews, contact Troy Garris at troy@garrishorn.com.