Workout Prospector Updated for New Standard Modification Interest Rate Requirements
May 21, 2012
Beginning today, you have additional technology support in Workout Prospector® to help you evaluate borrowers using the Freddie Mac Standard Modification interest rate. Because the interest rate may adjust from time to time, you can now offer at-risk borrowers a rate that is representative of current market conditions.
When you log in to Workout Prospector today, you will see a "Standard Mod Market Interest Rate" field in the "Section I: Additional Inputs for Standard Modification" screen. This new field is not editable; it will populate automatically with the interest rate in effect that is posted on the Standard Modification Interest Rate Web page as of the date you indicated in the "Workout Decision Date" field.
Upcoming Interest Rate Adjustment
The current interest rate is 5 percent. Beginning today, you will see this rate reflected in the new "Standard Mod Market Interest Rate" field.
As a reminder:
- We will publish a new rate on the Standard Modification Interest Rate Web page on June 1, 2012. You should check the Web page for the new rate when it becomes available. We will also communicate the new rate to you in a Single-Family Update email on June 1.
- Workout Prospector will display the new rate in the "Standard Mod Market Interest Rate" field if a new borrower evaluation is conducted on or after June 1. However, you are not required to use this new rate for trial period plan evaluations conducted in June 2012.
- You must use the new interest rate for new borrower evaluations conducted on or after July 1, 2012.
We encourage you to use the new rate as soon as it is published for your new borrower evaluations. If you are not operationally ready to support the new interest rate for trial period plan evaluations conducted in June 2012, you must complete the following steps to evaluate borrowers for a trial period plan and determine the permanent modification terms using the 5 percent interest rate:
- Underwrite the borrower to determine their eligibility for a trial period plan. Please note: As you transmit the loan through Workout Prospector, you may receive fatal warnings because you are using the 5 percent interest rate and not the new interest rate. If the fatal warnings are due to the differences in the interest rate used and result in different modification terms, continue transmitting the loan in Workout Prospector.
- Prepare the final loan modification documents using the 5 percent interest rate you used when you determined the borrower's eligibility for a trial period plan.
- Reflect the correct loan modification terms in Form 1128, Loss Mitigation Transmittal Worksheet, including use of a 5 percent interest rate, when you submit the loan for settlement.
Get More Information
- Access the updated Workout Prospector Users' Guide by using your mortgage servicing products ID and password.
- Register to attend a Workout Prospector for Modifications webinar to learn how to navigate the Standard Modification screens.
- Attend a Freddie Mac Standard Modification webinar to learn more about the Single-Family Seller/Servicer Guide (Guide) requirements.
- Visit the Standard Modification Interest Rate Web page.
- Read Guide Bulletin 2012-10.