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New Obtain Credit Bid Functionality Streamlines Foreclosure Sale Bidding

December 18, 2013

With Single-Family Seller/Servicer Guide Bulletin (Guide) Bulletin 2013-27, we’re introducing our new Obtain Credit Bid functionality that will provide foreclosure sale bids, referred to as credit bids, to Servicers for foreclosure sale bidding. The Obtain Credit Bid functionality is accessible through the Freddie Mac Service Loans application (Service Loans application) and must be used for all foreclosure sales occurring on or after March 17, 2014.

Credit bids obtained through this new functionality are only applicable for:

  • First-lien mortgages not covered by mortgage insurance, unless Freddie Mac has delegations of authority with the Mortgage Insurer, and
  • Mortgages not insured by the Federal Housing Administration, nor guaranteed by the U.S. Department of Veteran Affairs or Rural Housing Service, and
  • Mortgages not otherwise subject to a credit enhancement.

Obtaining Credit Bids via the Service Loans Application

Servicers can now submit a request for a credit bid using the Obtain Credit Bid functionality via the Service Loans application, rather than obtaining valuations directly from Freddie Mac through BPOdirect® to prepare foreclosure sale bids on eligible mortgages. A credit bid will be returned with a “good through date” indicating the length of time for which the credit bid will be valid, and an estimated sale date.

Freddie Mac recommends that Servicers submit a request for a credit bid no less than 30 and no more than 90 days before the scheduled sale date to ensure a credit bid is received in time for the foreclosure sale.

Once a credit bid is returned by the Service Loans application, Servicers must follow the bidding instructions for eligible mortgages:

  • Unless State law requires that an appraisal report be used to set the foreclosure sale bid, start the bid at the statutory minimum not to exceed an amount equal to the lesser of:
    • 100 percent of the credit bid, or
    • Total indebtedness, which includes the unpaid principal balance, accrued interest, escrow advances and expenses, or
    • Such other amount as may be required by State law

Obtain Credit Bid Functionality Benefits

On demand access to credit bids helps streamline the foreclosure sale bidding process. Additionally, the new functionality:

  • Replaces the need for Servicers to obtain property values to prepare foreclosure sale bids in connection with scheduled foreclosure sales for eligible mortgages.
  • Reduces the amount of time that would otherwise be required to enter each loan manually with the bulk import capability.
  • Decreases the need to track multiple and varying foreclosure sale bidding guidelines.
  • Ensures that the Service Loans application is the primary gateway for conducting servicing business with Freddie Mac.

Registering for the Obtain Credit Bid Functionality

To use the Obtain Credit Bid functionality, Servicers must be assigned the user role of FCL – Specialist or FCL – Specialist (Read Only) in the Service Loans application. Servicers should be fully registered and begin submitting credit bid requests at least 30 days prior to foreclosure sales scheduled on or after March 17, 2014.

We’ve updated the appropriate Guide forms with the new user roles.

Visit the Service Loans Application Resource Center for detailed instructions on how to access the new Obtain Credit Bid functionality.

Training and Resources

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