Freddie Mac has released its November 7th Bulletin titled, "Revised Selling and Servicing Requirements for Mortgages Affected by Hurricane Katrina and Hurricane Rita."

Previous Bulletins discussed the establishment of a three-zone methodology created in order to provide more specific instructions for servicing Mortgages owned by Freddie Mac and for originating Mortgages for sale to Freddie Mac that are secured by properties in specific counties/parishes

With this Guide Bulletin, Freddie Mac is moving three counties/parishes from Zone Two to Zone One and extending the existing temporary selling and Servicing requirements through March 31, 2007.

The following three counties are being moved to Zone 1

• George County, Mississippi
• Jasper County, Texas
• Newton County, Texas

Please see the following Excel Spreadsheets for the affected zip codes. (Numerous tabs per spreadsheet)

 FHLMC 110706 Zone 1.xls

 FHLMC 110706 Zone 2.xls

 FHLMC 110706 Zone 3.xls

The changes in zone designations identified in this Guide Bulletin are effective immediately for Sellers originating Mortgages pursuant to temporary requirements, but effective December 1, 2006 for Servicers servicing Mortgages owned by Freddie Mac pursuant to its temporary requirements.

In addition Freddie Mac is extending the following temporary Servicing requirements for Mortgages secured by properties located in eligible Disaster Areas to March 31, 2007:

• The requirement to obtain Freddie Mac prior approval to resume or initiate foreclosure activities in Zone Two and Zone Three.

• The ability to approve forbearances up to an additional 120 days based on an individual assessment without Freddie Mac approval in Zone Three

• The ability to approve long term forbearances without the required documentation
  

• The requirement to obtain Freddie Mac prior approval for any lender-initiated property preservation work in Zone Two and Zone Three
  

• The existing credit reporting requirements
  
• The expiration date for the streamlined loan modification process, previously announced as November 30, 2006
  
  
• The delegation to approve a short payoff where 95% of the total debt is paid. As a reminder, Servicers must process short payoff transactions through the charge-off path in Workout Prospector II (WP II)

Servicers must continue to obtain prior Freddie Mac approval on the Form 105, Multipurpose Loan Servicing Transmittal, before resuming or initiating foreclosure proceedings for a Mortgage secured by a property located in Zone Three through March 31, 2007.

When submitting a request to resume or initiate foreclosure proceedings, Servicers must provide the same documentation that is required for resuming or initiating a foreclosure in Zone Two. For more information and complete requirements for obtaining Freddie Mac approval to resume or initiate foreclosure proceedings, please see the Freddie Mac February 10, 2006 Guide Bulletin under "Zone Two-moderate damage."

Servicers must continue to obtain prior Freddie Mac approval on the Form 105 for resuming or initiating foreclosure proceedings for Mortgages secured by properties located in Zone Two through March 31, 2007.

Servicers must continue to obtain prior Freddie Mac approval on Form 105 for commencement of any lender-initiated property preservation work, other than decisions on accessing an abandoned property for insurance claims, on properties located in Zone Two and Zone Three through March 31, 2007.

For Freddie Mac requirements with respect to re-keying of properties without prior approval, please click here

Credit reporting

Freddie Mac is extending the credit reporting requirements originally announced in the February 10, 2006 Guide Bulletin through March 31, 2007 to allow Servicers more time to work with affected Borrowers on resolving their delinquencies.

The streamlined loan modification requirements that previously were set to expire on November 30, 2006 are now extended through March 31, 2007. Beginning April 1, 2007, Servicers must return to existing Guide requirements for submitting and approving workout loan modifications (see Guide Chapter B65, Workout Options).

We are extending the requirements for short payoff approval through March 31, 2007. Originally announced in the October 7, 2005 Bulletin, these requirements allow Servicers to approve a short payoff of a Mortgage secured by a property in an eligible Disaster Area if all of the following requirements are met:

• At least 95% of the total debt is paid off
• The source of funds for the payoff is all proceeds from the Borrower's homeowners insurance or flood insurance or from a government agency and Borrower contribution if available
• The Servicer has verified that all available insurance claims have been filed and all proceeds from these claims have been received and will be applied toward the payoff

As announced in the May 1, 2006 Guide Bulletin, Servicers must use the charge-off path in Workout Prospector II to process these transactions and must release the lien on the property.

If the above requirements are not met, Servicers must contact their Freddie Mac Loss Mitigation Specialist for direction. Servicers must comply with all other requirements in Guide Sections B65.35 and B65.41.

Servicers are reminded of Freddie Mac's existing requirement to waive prepayment penalties pursuant to Guide Sections B33.4 and 51.19 if the Mortgage payoff is received in connection with a workout or Security Instrument default. Freddie Mac encourages Servicers to consider waiving the penalty in all other situations for Mortgages secured by properties located in eligible Disaster Areas.

Servicers are also reminded that they must continue to adhere to the temporary requirements announced with the February 10, 2006, May 1, 2006, and August 4, 2006 Guide Bulletins, except as they are amended by the temporary requirements contained in this Bulletin.

In addition, Servicers are still required to adhere to the Guide requirements for managing distressed properties found in Guide Sections 67.27 through 67.28 and in Chapter 68, added to the Guide with Bulletin 2006-3 dated August 21, 2006, except as they are amended by the temporary requirements contained in this Bulletin and the February 10, 2006, May 1, 2006, and August 4, 2006 Guide Bulletins.

Replacement pages to the Guide will not be issued to include the selling and Servicing requirements of this Bulletin. Seller/Servicers should retain a copy of this Bulletin to ensure compliance with all Freddie Mac requirements.

Both selling and Servicing requirements for Hurricane Katrina and Hurricane Rita are available on FreddieMac.com at http://www.freddiemac.com/corporate/about/how_we_help/katrina.html.

For answers to questions about the requirements contained in this Bulletin, Freddie Mac Seller/Servicers should contact their Freddie Mac representative or call (800) FREDDIE.

To access the Bulletin in its entirety including additional Selling requirements, please click here