Five Brothers

Freddie Mac Bulletin 2013-24: Servicing


Bulletin Number 2013-24

November 25, 2013

 

TO: Freddie Mac Servicers

SUBJECTS: This Single-Family Seller/Servicer Guide (“Guide”) Bulletin updates and revises our Servicing requirements as follows:

  • Updating our eligibility requirements for exceptions to Borrower documentation for short sales and deeds-in-lieu of foreclosure (“DIL”)
  • Updating the Guide to specify that Servicers are not delegated to approve a short sale or DIL when the Borrower’s Cash Reserves exceed $50,000
  • Revising our short sale and DIL processing and foreclosure suspension requirements
  • Revising our Borrower Response Package (BRP) review requirements for short sales
  • Updating our Trial Period Plan requirements

 

In addition, we are reminding Servicers of the retirement of Investor Accounting ManagerSM (IAM).

 

EFFECTIVE DATE

The changes announced in this Bulletin are effective January 10, 2014 unless otherwise noted.

 

SHORT SALES AND DILS

Streamlined Short Sales and Streamlined Deeds-in-Lieu of Foreclosure

 

To be eligible for a short sale or DIL, a Servicer must obtain and review a complete BRP. However, we currently permit exceptions to these Borrower documentation requirements for short sales in Guide Section B65.37(a) and for DILs in Section B65.44(a) when the Borrower is 90 days or more delinquent and has a FICO® score below 620 as of the evaluation date.

The following revisions to the eligibility requirements for exceptions to Borrower documentation for short sales and DILs were developed and adopted under the direction of the Federal Housing Finance Agency (FHFA), and are part of the Servicing Alignment Initiative (SAI):

  • Permitting a Borrower whose Mortgage debt has been discharged in a Chapter 7 Bankruptcy to be eligible for an exception to Borrower documentation, regardless of the Borrower’s FICO score
  • Removing Mortgages that were originated as Investment Properties from eligibility for an exception to Borrower documentation. The Servicer must obtain and review a complete BRP in order to evaluate the Borrower for a short sale or DIL if the Borrower’s Mortgage was originated as an Investment Property.

 

Additionally, we now refer to a short sale that meets the requirements for exception to Borrower documentation requirements in Section B65.37(a) as a “Streamlined Short Sale” and a DIL that meets the requirements for exception to Borrower documentation requirements in Section B65.44(a) as a “Streamlined Deed-in-Lieu of Foreclosure.”

 

Sections B65.1, Introduction, B65.3, Chapter Contents, B65.4, Approval Authority, B65.37 and B65.44, each titled Borrower Documentation, and B65.37.1 and B65.44.1, each titled Borrower Contributions and Relocation Assistance, have been revised to reflect these changes.

 

These changes are effective February 1, 2014; however Servicers are encouraged to implement them sooner if they are operationally able to do so.

 

Borrower contribution

As stated in Sections B65.37.1 and B65.44.1, the Servicer must submit a Borrower contribution request for a short sale or DIL to Freddie Mac for review when the Servicer has determined that the Borrower’s Cash Reserves exceed $50,000. We are updating Sections B65.36, Short Sale Eligibility Requirements and Servicer Approval Authority, and B65.43, Deed-in-Lieu of Foreclosure Eligibility Requirements and Servicer Approval Authority, to reflect that Servicers are not delegated to approve a short sale or DIL when the Borrower’s Cash Reserves exceed $50,000; Servicers must submit a short sale or DIL recommendation for these Borrowers to Freddie Mac for review.

 

This change is effective February 1, 2014; however Servicers are encouraged to implement this change sooner if they are operationally able to do so.

 

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