Be Prepared for New Default Legal Services requirements before June 1
May 2, 2013
On November 9, 2012, we announced new requirements and procedures for selecting and managing law firms handling bankruptcies and default-related legal services for Freddie Mac mortgages (Default Legal Matters) that will go into effect on June 1, 2013.
We encourage you to prepare for the new requirements as soon as possible, including submitting information for each law firm you wish to retain in each jurisdiction for Freddie Mac’s review. The process has several steps, and early submission will help ensure that you will be in a position to refer Freddie Mac Default Legal Matters on June 1.
The steps are as follows:
- You must submit a Servicer Selection Form (SSF) for each law firm to Freddie Mac for review through the Servicer Attorney Tracking System (SATS) website. Instructions on how to register are available in the Resources Section on our Default-Related Legal Services Web page.
- We will notify you of the “objection” or “no objection” decision with an email through SATS. Freddie Mac continues to strive for a 15 business day turnaround time as described in Single-Family Seller/Servicer Guide Bulletin 2012-25; however, given the number of submissions received, the time frame may go beyond 15 business days.
- You enter into a contract with a law firm that receives a “no objection” response if you do not have an existing contract.
- We send the law firm a Limited Retention Agreement (LRA) between us and the firm. After the law firm signs and returns the LRA, the law firm receives an automated email from us through SATS providing a law firm identification number and Web URL links to the required new law firm tutorials.
- The law firm completes the new law firm tutorials for each jurisdiction in which it is retained.
- We execute and return the LRA to the law firm and notify you that the law firm is eligible to receive new referrals on or after June 1.
Freddie Mac will continue to manage any Legacy Matters (referrals of Default Legal Matters sent to law firms or trustees prior to June 1) remaining with former Designated Counsel law firms according to the requirements and contractual agreements in place prior to June 1. You may reference these requirements in Guide Chapter A69, Retention of Counsel for Freddie Mac Default Legal Matters, prior to June 1, 2013. However, you must comply with the requirements related to the escalations of issues as well as the monitoring, managing, terminating, and suspending of all law firms handling Legacy Matters as provided in Guide Chapter 69, Selection, Retention and Management of Law Firms for Freddie Mac Default Legal Matters.
You also should be prepared to perform all valuation orders and foreclosure sale bidding requirements on First Lien Mortgages not covered by mortgage insurance for all foreclosure sales conducted on or after June 1. Review Guide Bulletin 2013-6 for more details on bidding requirements.
Training and Resources
We encourage you to enroll in our customer Web training, Bulletin 2012-25: Servicer Selection and Management of Law Firms, available through Freddie Mac’s Learning Center.
Additionally, you may access the new law firm tutorials that law firms are required to complete as well as view the Limited Retention Agreement we will send to law firms on our Default-Related Legal Services Web page. Your Servicing Applications ID and password are required.
- Visit our Default-Related Legal Services Web page.
- Contact your Freddie Mac representative.
- Call 800-FREDDIE.