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Guide Bulletin 2012-23 Announces Changes to Servicing Requirements

October 31, 2012

Updates in today’s Single-Family Seller/Servicer Guide (Guide) Bulletin 2012-23 provide you with precise requirements for your loss mitigation activities. All requirements are effective immediately unless specified otherwise. We are:

  • Announcing delegation agreements with several mortgage insurance (MI) companies. On November 1, 2012, you can begin approving short sales and deeds in lieu of foreclosure that are completed in accordance with the Guide without obtaining pre-approval from the participating MI companies. With the new delegation agreement, you will experience greater efficiencies in evaluating borrowers for foreclosure alternatives.
  • Specifying when you must provide documents for MI claims. You must provide all information or documentation to the MI company no later than 60 days after the foreclosure sale, short sale, or deed in lieu of foreclosure. You may be required to submit the appropriate documents in less than 60 days if specified by Freddie Mac or the MI’s master policy.
  • Revising the imminent default documentation requirements. The Home Affordable Modification program (HAMP) and Freddie Mac Standard Modification requirements have been revised to further streamline borrower documentation requirements. You may now rely on the documentation borrowers provide in their Borrower Response Package as required in Guide Section 65.17, Verifying a Borrower’s Hardship, when evaluating borrowers for imminent default.
  • Providing you with the option to use the Automated Clearing House (ACH). You now have the option to utilize ACH to receive eligible expense reimbursements and incentive payments and benefit from faster processing of payments. Refer to new Guide Exhibit 98, Expense Reimbursement/Incentive Authorization Agreement for ACH Credits, for instructions and required documentation.
  • Reimbursing you for interest. In cases where a taxing authority considers interest as a penalty or part of a penalty, Freddie Mac will reimburse you on the first instance only. This applies to borrowers who have non-escrowed mortgages and did not pay their taxes.
  • Updating charge-off recommendation requirements. These updates further support community stabilization by reducing the number of charge-offs. Conventional mortgages that have unpaid principal balances (UPB) of $5,000 or less must meet additional requirements to qualify for charge-off consideration. In addition, land value may no longer be considered when evaluating condemned properties for a charge-off.
  • Requiring you to obtain Freddie Mac’s prior approval to refer a borrower to foreclosure in certain instances. If you believe the foreclosure may pose a risk of property ownership to Freddie Mac or may not be in Freddie Mac’s best interest when you conduct the pre-referral account review, you must obtain Freddie Mac’s approval to refer a mortgage to foreclosure.

Also, refer to today’s Guide Bulletin for information on new diversity and inclusion provisions, where to find Exclusionary List requirements for servicing, and reminders on offshore accounts, the retirement of balloon/reset mortgages, and ARM rate cap revisions.

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