| FHLMC August 4th Bulletin |
| Monday, 07 August 2006 | |
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FHLMC has released its August 4th Bulletin titled, Revised Selling and Servicing Requirements for Mortgages Affected by Hurricane Katrina and Hurricane Rita. With this bulletin, Freddie Mac announces changes to its temporary selling and servicing requirements for mortgages secured by properties located in "eligible disaster areas," which are areas declared eligible for Individual Assistance from FEMA. Servicing Requirements Effective September 1, 2006, through November 30, 2006, unless otherwise noted. As discussed in prior Bulletins (February 10th and May 1st) Freddie Mac established a three-zone methodology that applies to both servicing Mortgages owned by Freddie Mac and originating Mortgages for sale to Freddie Mac. Twenty counties/parishes are moved from Zone Two to Zone One. Twelve counties/parishes are moved from Zone Three to Zone Two. To view an updated zip code list for the three (3) zones, please click on the following Excel Spreadsheets. (Multiple tabs on each spreadsheet). To run Property Reports for properties housed in the Safeguard database, please click on the following links: ***Please note: Log-in Required Effective September 1, 2006, Freddie Mac is removing the blanket foreclosure moratorium for Zone Three. If after making every effort to assist a Borrower with a Mortgage secured by a property located in a Zone Three county/parish in retaining homeownership, a Servicer determines there is no viable alternative to foreclosure, then the Servicer may resume or initiate foreclosure proceedings in accordance with the requirements of this Bulletin.
Freddie Mac continues to encourage Servicers to extend mortgage relief to borrowers with Freddie Mac loans on a case-by-case basis regardless of which zone the Mortgaged Premises are located in.
· 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 November 30, 2006. · 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. Freddie Mac requirements with respect to re-keying of properties without prior approval is available in the February 10, 2006 Guide Bulletin. · Freddie Mac extends the credit reporting requirements announced in the February 10, 2006 Bulletin through November 30, 2006, allowing Servicers more time to work with affected Borrowers on resolving their delinquencies. The streamlined loan modification requirements previously set to expire on August 31, 2006 are extended through November 30, 2006. Beginning December 1, 2006, Servicers must return to existing Guide requirements for submitting and approving workout loan modifications. · Freddie Mac extends the requirements for short payoff approval through November 30, 2006. 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: 1) At least 95% of the total
debt is paid off 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 are reminded that they must comply with all other requirements in Guide Sections B65.35 and B65.41. Servicers are reminded of the existing requirement to waive prepayment premiums pursuant to Guide Sections B33.4 and 51.19 if the Mortgage payoff is received in connection with a workout or Security Instrument default. Feddie Mac encourages Servicers to consider waiving the premium 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 and May 1, 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 58.11 and 67.27 through 67.29, except as they are amended by the temporary requirements contained in this Bulletin and the February 10, 2006 and May 1, 2006 Bulletins. Please note, the zone designations identified in this Guide Bulletin are effective immediately for Sellers originating Mortgages pursuant to temporary requirements, but effective September 1, 2006 for Servicers servicing Mortgages owned by Freddie Mac pursuant to its temporary requirements Selling Requirement Effective immediately;
· Freddie Mac extends the temporary underwriting relief and flexibility for Borrower credit reputation and capacity, and the LTV/TLTV/HTLTV ratio limits announced in the September 30, 2005 Bulletin (as amended by the October 7, 2005, November 8, 2005 and May 1, 2006 Bulletins) for those Mortgages with Note Dates on or after August 30 or September 25, 2005, as applicable, through December 31, 2006. As a reminder, Freddie Mac removed the LTV/TLTV/HTLTV ratio limits for Mortgages secured by properties located in Zone One in our May 1, 2006 Bulletin. The temporary special collateral requirements announced in the September 30, 2005 Bulletin, as modified in the May 1, 2006 Bulletin, remain in effect until further notice. · Effective with the June 26, 2006 Guide Bulletin, Freddie Mac removed the median income limits for Borrowers with Home Possible Mortgages secured by properties located in eligible Disaster Areas affected by Hurricane Katrina and Hurricane Rita with Note Dates of December 31, 2007 or earlier. With this Bulletin, Freddie Mac announces that Home Possible Mortgages originated with Borrower income limits exceeding the median income limit must be delivered to Freddie Mac on or before March 31, 2008. As As a reminder, Sellers may disregard the following feedback message in Loan Prospector for Home Possible Mortgages secured by property located in eligible Disaster Areas. Borr(s) income does not meet Hm Poss income
limits Except as set forth in the September 30,2005 Bulletin (and amended by this Bulletin and the October 7, 2005 November 8, 2005 and the May 1, 2006 Bulletins), all requirements in a Seller’s Purchase Documents must be met for a Mortgage to eligible for sale to Freddie Mac. 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 our 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 view the entire Bulletin, please click on the following link.
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