Revised temporary selling and servicing requirements for mortgages affected by hurricanes Katrina and Rita

We've made changes to our temporary selling and servicing requirements for eligible mortgages impacted by Hurricane Katrina or Hurricane Rita. The changes ensure continued mortgage relief in eligible disaster areas that remain in need. With our June 4 Single-Family Seller/Servicer Guide (Guide) Bulletin [PDF 135K], we:

• Moved five counties/parishes from Zone Two to Zone One.  The new designations are effective June 4 for Sellers, and July 1 for Servicers.
  
• Extended existing temporary selling requirements for mortgages with note dates on or after August 30, 2005 (Hurricane Katrina) or September 25, 2005 (Hurricane Rita) through December 31, 2007.
  
• Extended the existing temporary servicing requirements an additional 90 days through September 30, 2007.
  
• Provided temporary payment history relief for borrowers requesting cancellation of borrower-paid mortgage insurance.
  
• Reminded Servicers of factors to consider for extending forbearance, such as the borrower's desire to retain the property, their intention and ability to repair the property and resume making mortgage payments, and the status of repairs, insurance claims, and grant funds.

Sellers, please note that our existing temporary special collateral requirements remain in effect until further notice, and as previously announced, the area median income limits for Home Possible® Mortgages secured by properties located in eligible Disaster Areas do not apply for mortgages with note dates of December 31, 2007 or earlier that are delivered on or before March 31, 2008. We encourage you to review the Bulletin for full details.

For Servicers, make sure you review our existing requirements to waive prepayment penalties according to our Guide if a mortgage is paid off in connection with a workout or security instrument default. Servicers are encouraged to waive prepayment penalties for mortgages secured by properties located in eligible Disaster Areas.

Servicers should continue to work with borrowers to provide assistance, including continued suspension or reduction of mortgage payments, to address the particular circumstances faced by each borrower.

More Information

• Visit the Hurricane Katrina and Rita update web page for more details and important resources for Sellers and Servicers.
  
• View the June 4 Guide Bulletin [PDF 135K].
• Please direct questions to your Freddie Mac representative or (800) FREDDIE.