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Foreclosure, Alternatives to Foreclosure, and LPI Requirement Changes Announced in Guide Bulletin 2013-27

December 18, 2013

In Single-Family Seller/Servicer Guide (Guide) Bulletin 2013-27, we announced updates and revisions to provide clarity and streamline several servicing processes. These requirement changes include:

  • New Obtain Credit Bid functionality that provides Servicers with foreclosure sale bids, referred to as credit bids. The Obtain Credit Bid functionality is accessible through the Freddie Mac Service Loans application and must be used for all foreclosure sales occurring on or after March 17, 2014. Read more about the Obtain Credit Bid functionality, including how to gain access, here.
  • Expanded requirements for alternatives to foreclosure, including:
    • Updates to the Freddie Mac Standard Modification and Freddie Mac Streamlined Modification to include mortgages with pre-modification mark-to-market loan-to-value ratios less than 80 percent
    • Revised Capitalization and Extension Modification for Disaster Relief requirements with respect to the determination of the modification terms
    • Giving Servicers discretion to determine the length of a short-term forbearance plan for mortgages impacted by an Eligible Disaster
    • Revised evaluation criteria for borrower contributions towards a short sale or deed-in-lieu of foreclosure
  • Revised foreclosure requirements regarding:
    • Obtaining judgment for less than total indebtedness
    • Reimbursements when using expense code 040002 (State Registration Fee)
    • Working with Freddie Mac and our vendors on deficiency collections
  • New requirements for Lender-Placed Insurance (LPI) in connection with the Servicing Alignment Initiative. At the direction of the Federal Housing Finance Agency:
    • Servicers may no longer receive compensation or incentives from LPI carriers
    • Servicers or their affiliates may not insure or reinsure LPI

Read Guide Bulletin 2013-27 for additional updates including requirements related to preparing modifications in accordance with federal, state, and local laws, and reminding Servicers to comply with the Office of Foreign Assets Control requirements.

Training and Resources

To better understand the revised foreclosure sale bidding requirements announced in this Guide Bulletin, register for the Freddie Mac Obtain Credit Bid webinar offered through Freddie Mac’s Learning Center, which also has updated training materials to support changes announced in this Guide Bulletin.

Reminder

As announced in Guide Bulletin 2013-21, new mortgage servicing requirements in response to the Consumer Financial Protection Bureau’s final rule become effective on January 10, 2014. Please review our updated FAQs for more information.

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