FHLMC Guide Bulletin 2013-21 Updates Mortgage Servicing Requirements
On October 11, Freddie Mac released Guide Bulletin 2013-21, subtitled Updates in Response to the CFPB Mortgage Servicing Final Rule.
UPDATES IN RESPONSE TO THE CFPB MORTGAGE SERVICING FINAL RULE
Freddie Mac is providing Servicers with updated mortgage servicing requirements in today's Single-Family Seller/Servicer Guide (Guide) Bulletin 2013-21. The updated requirements are in response to the Consumer Financial Protection Bureau's (CFPB) final rule, which implements the mortgage servicing provisions of the Truth-in-Lending Act and Real Estate Settlement Procedures Act, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
All of the changes announced in this Guide Bulletin are effective for Servicing activities completed on or after January 10, 2014.
The revised requirements announced in today's Guide Bulletin, which impact requirements adopted under the Federal Housing Finance Agency (FHFA)-directed Servicing Alignment Initiative, are the result of discussions between Freddie Mac, Fannie Mae, and FHFA to assess the implications of the final rule. FHFA has directed us to align with Fannie Mae on the revised requirements included in this Guide Bulletin.
Servicers Are Responsible for CFPB Final Rule Compliance
While Freddie Mac has established our servicing requirements in response to the CFPB's final rule, Freddie Mac will not interpret CFPB regulations for Servicers or determine how Servicers should comply. Compliance with the CFPB final rule and other applicable laws are the Servicer's responsibility. A Servicer's compliance with Freddie Mac's requirements does not ensure that the Servicer is in compliance with the CFPB final rule or any other applicable laws.
Servicing Requirements for Delinquent Mortgages Secured by Primary Residences
We've added new Guide Chapter 63, Delinquency Management on Mortgages Secured by Primary Residences, to provide guidance on communication and collection efforts, the appeals process, and foreclosure referrals and suspension. Please familiarize yourself with the following changes:
- Collection Efforts and Use of a Loss Mitigation Tool. Servicers are prohibited from using a loss mitigation tool for purposes of delaying the initial borrower solicitation package required to be sent by the 35th day of delinquency. Servicers are now required to send the initial borrower solicitation package as early as the 31st day and no later than the 35th day of delinquency unless quality right party contact and borrower commitment to cure the delinquency has been obtained. Servicers may continue to use a loss mitigation tool to manage calling campaigns.
- The Appeals Process. New requirements are being introduced for the borrower's appeals process for the First Complete Borrower Response Packages (BRP) submitted 90 or more days prior to a foreclosure sale date or when a foreclosure sale date has not yet been scheduled. Refer to Guide Section 63.3 for these new requirements, the Guide Glossary for the newly defined "First Complete Borrower Response Package", and Guide Exhibit 93, Evaluation Model Clauses, for updated evaluation model clauses.
- Revised Foreclosure Referral Requirements. Servicers may no longer refer to foreclosure any earlier than the 121st day of delinquency unless one of the exceptions outlined in Guide Section 66.9.1 applies or applicable law permits earlier referral. Servicers must refer all mortgages secured by Primary Residences with expired breach letters to foreclosure no earlier than the 121st day of delinquency and no later than five business days after the 121st day of delinquency. In addition, Servicers must take the first legal action after referral to foreclosure.
- Foreclosure Suspension Obligations. After referral to foreclosure, if a Servicer receives the First Complete BRP on a mortgage secured by a Primary Residence more than 37 days prior to a foreclosure sale date or a foreclosure date being scheduled, the Servicer must delay taking the first legal action. If the first legal action has been taken, Servicers must delay motion for judgment or order of sale unless certain conditions apply.
Servicing Requirements for All Mortgages
Today's Guide Bulletin also announces updates for servicing requirements related to BRP acknowledgement, error resolution, disaster forbearance plans, and pre-referral to foreclosure.
- BRP Acknowledgement. Within five business days of BRP receipt, Servicers must confirm in writing to borrowers that they've received the BRP.
- Error Resolution. Freddie Mac has replaced our current case escalation requirements with provisions for error resolution for any servicing errors asserted by borrowers.
- Disaster Forbearance Plan. A complete BRP must be obtained when the borrower is being considered for and offered a forbearance plan exceeding six months in length. In cases where borrowers impacted by an Eligible Disaster are unable to provide complete BRPs at the end of an initial six months of disaster forbearance, Servicers may offer a successive disaster forbearance plan up to an additional six months in length without a complete BRP. Servicers may not exceed a total of 12 months of disaster forbearance in total without Freddie Mac approval.
- Pre-Referral to Foreclosure. Servicers now have up to 15 days to complete their pre-referral review prior to foreclosure referral. We've also eliminated the requirement for Servicers to postpone foreclosure referral for up to 10 days if a complete BRP is received.
Today's Guide Bulletin has detailed information about these changes.
Reminder about CFPB and ECOA Final Rule
Finally, we'd like to remind Servicers to review Freddie Mac updated guidance related to the CFPB final rule that implements the Equal Credit Opportunity Act property valuation notice and disclosure requirements in our October 8 Guide Bulletin 2013-20.
Training and Resources
To help Servicers understand the new and revised requirements announced in this Guide Bulletin, we encourage registration for the Bulletins 2013-20 & 2013-21: Servicing Updates in Response to the CFPB's Mortgage Servicing Rules webinar.
Visit Freddie Mac's Learning Center to view updated training materials supporting the changes announced in this Bulletin.
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