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Guide Bulletin 2012-10 Expands and Adjusts Available Loss Mitigation Options

April 23, 2012

To further support your efforts to help at-risk borrowers avoid foreclosure, we are expanding and adjusting certain loss mitigation options in Single-Family Seller/Servicer Guide (Guide) Bulletin 2012-10. These refinements offer greater precision in the options available to help struggling homeowners.

Servicing

The changes included in Guide Bulletin 2012-10, which are discussed below, are effective immediately unless otherwise indicated.

State Housing Finance Agencies' (HFAs) Mortgage Assistance Program Expansion

We are providing our requirements for Servicer participation in transition assistance programs that are offered by HFAs and funded by the Hardest Hit Fund initiative. You must now accept transition assistance funds from a state HFA as long as the HFA's transition assistance program does not conflict with Freddie Mac's short sale, deed-in-lieu, or other requirements. Transition assistance programs are designed to help at-risk borrowers avoid foreclosure and transition into more affordable housing by receiving funds to assist in completing a short sale or deed-in-lieu, or assist with relocation costs.

Refer to today's Guide Bulletin for information on how to:

  • Apply the funds received toward subordinate lien balances and relocation expenses.
  • Report mortgages that received transition assistance.

Additionally, you can easily reference all of the HFA mortgage assistance program requirements, including the transition assistance program, in new Guide Section 64.12, Hardest Hit Fund.

Freddie Mac Standard Modification Interest Rate Adjustments

We are further refining our Standard Modification requirements by adjusting the interest rate you use to evaluate a borrower to align more closely with market conditions. As a result, there are two important changes of which you need to be aware:

  • We will begin publishing the interest rate on our new Standard Modification Interest Rate Web page. You must refer to this Web page each time you calculate the terms of a trial period plan payment to ensure that you are using the most current interest rate in effect on the evaluation date. The same rate must be used for the final modification terms. We encourage you to bookmark this Web page for quick and easy access.
  • The current interest rate is 5 percent. However, we will adjust the required interest rate for new trial period plan evaluations conducted on or after July 1, 2012. You will find the new interest rate on the Standard Modification Interest Rate Web page beginning June 1, 2012, and are encouraged to begin using the new rate as soon as it is published.

Additional Guide Bulletin Updates

It is important that you review Guide Bulletin 2012-10 carefully for additional requirement changes that we are announcing today. These changes include:

  • Extending the Home Affordable Modification program (HAMP) and Home Affordable Foreclosure Alternatives (HAFA) initiative through December 31, 2013.
  • Revising our HAMP eligibility requirements to exclude mortgages subject to full recourse or indemnification agreements and providing suggested guidance on how to assist these borrowers with alternatives to foreclosure.
  • Updating Guide Directory 5 and Guide forms.

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