FHLMC has issued a new bulletin titled;

Servicing Relief Measures for Mortgages Affected by Hurricane Katrina and Hurricane Rita, and a change to Selling Requirements for Mortgages Affected by Hurricane Rita.

Included in this bulletin is the Requirement of an initial distressed property inspection on all delinquent Mortgages in eligible Disaster Areas, its requirements and the reimbursable amount from FHLMC.

Servicers are required to complete an initial distressed property inspection on properties located in eligible Disaster Areas if the property is accessible and:

• The Mortgage is delinquent, including in forbearance, and there has been no contact with the Borrower or,
• The Mortgage is delinquent, including in forbearance, there has been contact with the Borrower and the Borrower has no information about the condition of the property.

The distressed property inspection must be completed between October 15, 2005, and December 31, 2005.

A distressed property inspection includes:

• Assessing the levels of damage to the areas and the specific properties
  
• Providing a full description of wind, water, flood, fire, mold and other damages
  
• Making a determination as to whether the property is currently flooded or has experienced flood damage
  
• Making a determination as to whether the roof is intact
  
• If allowed by applicable law, leaving a door hanger at the property with the Servicer's contact information on it. If contact is made with occupants or Borrowers, property inspectors should obtain the following information:

1. Whether the occupant or Borrower plans to continue to occupy the property
   
2. Whether the Borrower has filed an insurance claim

The Servicer does not need to submit the inspection report to Freddie Mac unless:

• The insured improvements have suffered a total or near total loss
  
• The Borrower wishes to apply insurance proceeds to the Mortgage debt instead of repairing the property and the proceeds are not sufficient to pay off the existing Mortgage debt, except as provided in section 2, above, for short payoffs

If either of the above conditions exist, the Servicer must submit the report and any recommendation along with the appropriate documentation to us via Form 105, Multipurpose Loan Servicing Transmittal, within five Business Days of learning of the situation.

Freddie Mac will reimburse Servicers for inspections of properties in an eligible Disaster Area as follows:

For properties affected by Hurricane Katrina – Servicers will be reimbursed for the cost of the initial distressed property inspection up to a maximum of $25, and up to three regular monthly delinquent property inspections if performed in the months of October, November and/or December 2005, up to a maximum of $24 for each eligible Mortgage regardless of whether the Mortgage subsequently becomes current or goes to foreclosure

For properties affected by Hurricane Rita – Servicers will be reimbursed for the cost of the initial distressed property inspection up to a maximum of $25, and up to two regular delinquent property inspections if performed in the months of November and December 2005, up to a maximum of $16 for each eligible Mortgage regardless of whether the Mortgage subsequently becomes current or goes to foreclosure

Servicers must continue to conduct regular monthly inspections as required in Section 64.7 of the Guide on all delinquent Mortgages, even if a distressed property inspection is conducted.

To view the full Bulletin please click on the following link

FHLMC October 7th Bulletin