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Default-Related Legal Services

May 2, 2013

Important Notice

Servicers can now access the Limited Retention Agreement and law firm training tutorials.

The new requirements for default legal services go into effect in more days. Be prepared!

New requirements for default-related legal services effective June 1, 2013

Beginning June 1, 2013, Servicers will be responsible for the selection and management of law firms to handle all new referrals of default-related legal services associated with Freddie Mac mortgages, including foreclosures, loss mitigation, bankruptcy, and related litigation. Servicers must be proactive in selecting and engaging law firms to be in compliance by the effective date. Under the requirements, Servicers are solely responsible for selecting and managing law firms with expertise in end-to-end default-related legal services: foreclosure, bankruptcy, REO, and other litigation matters involving mortgages owned or guaranteed by Freddie Mac, for all new referrals on or after June 1, 2013.

The new requirements, outlined in Single-Family Seller/Servicer Guide (Guide) Bulletin 2012-25, will replace the existing Designated Counsel Program (DCP). Freddie Mac will continue to manage DCP default-related litigation and legal matters, known as “Legacy Matters,” in accordance with current requirements and contractual agreements for all DCP referrals prior to June 1, 2013, with the exception of update attorney fee limits, announced April 15, which will apply in certain circumstances. For more information about fee schedules, see Guide Exhibit 57A, Approved Attorney Fees and Title Expenses. For a complete list of Designated Counsel firms, go to Freddie Mac’s Designated Counsel List.

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Program Details

Effective June 1, 2013, Servicers will have sole responsibility for default-related legal services in three main areas: the selection and engagement, management and oversight, and termination and suspension of law firms.

  • Servicers must select a law firm that meets Freddie Mac’s minimum requirements as outlined in Guide Chapter 69, on November 9, 2012.
  • Servicers are required to submit information on law firms they have selected to Freddie Mac online via the new Servicer Attorney Tracking System (SATS), hosted by Freddie Mac’s software vendor Quandis. The SATS online process replaces the Guide Exhibit 99, Servicer Selection Form email submission process announced in Guide Bulletin 2012-25 on November 9, 2012.
  • SATS requires one of the following browsers or browser plugins:
    • Windows® Internet Explorer 9 or later
    • Windows Internet Explorer 6, 7, 8 with the Google Chrome Frame plugin
    • Google Chrome

    If you experience difficulties installing a compatible browser or plugin, please contact your IT help desk. If you need further assistance, please contact Quandis support at 949-525-9000, extension 2, or email sats.support@quandis.com.

  • To access SATS, Servicers must complete an online self-registration on the SATS website and create at least one individual user. Servicers will submit a Servicer Selection Form with information about the Servicer's selected law firm. Registered Servicers can track each submission’s status during the Freddie Mac review process, as well as respond to our potential requests for additional information via the SATS system. Detailed instructions on SATS and how to register have been posted in the Resources section below.
  • Following receipt of a “no objection” response from Freddie Mac for a submitted law firm, the Servicer will need to enter into a contract with the law firm, if a contract does not already exist.
  • Freddie Mac will send the law firm Limited Retention Agreement. When the law firm signs and returns the Limited Retention Agreement to Freddie Mac, it will receive an automated email from Freddie Mac through SATS providing the firm identification number and links to mandatory new law firm tutorials.
  • Firms are required to complete training for each jurisdiction in which they are retained prior to providing default-related legal services for new referrals of Freddie Mac mortgages on or after June 1. After the law firm has completed the training, Freddie Mac will sign the Limited Retention Agreement, and the firm will be eligible for referrals.
  • In addition to its responsibilities for selecting and engaging firms, a Servicer also is solely responsible for:
    • Monitoring and managing all aspects of the law firm’s performance and the firm’s compliance with applicable Freddie Mac requirements.
    • Performing a due diligence review and taking action if issues arise that could lead the Servicer to terminate, suspend, or transfer files from a law firm.
  • Servicers must be proactive in selecting and engaging law firms prior to June 1, 2013, to be able to refer Freddie Mac default legal matters by the effective date.
  • Servicers will have to perform all valuation orders and foreclosure sale bidding requirements for all sales conducted on or after June 1. See Guide Bulletin 2013-6 for more details on bidding requirements.

Training

Servicers are encouraged to enroll in our customer Web training, Guide Bulletin 2012-25: Servicer Selection and Management of Law Firms through Freddie Mac’s Learning Center.

Servicers also may access the mandatory law firm training. The site requires your Servicing Applications ID and password to access secured resources. Law firms will receive information on how to access law firm training when they have signed the Limited Retention Agreement with Freddie Mac.

Resources

Publications

  • May 2, 2013 Single-Family News Center article.
  • April 15, 2013 Single-Family News Center article.
  • March 1, 2013 Single-Family News Center article.
  • February 15, 2013 Single-Family News Center article.
  • January 30, 2013 Single-Family News Center article.
  • November 9, 2012 Single-Family News Center article.

Access the Limited Retention Agreement

Access the Law Firm Training Tutorials

© 2013 Freddie Mac

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