September 10 Guide Bulletin revises temporary servicing requirements for mortgages affected by Hurricanes Katrina and Rita

With the release of our special Single-Family Seller/Servicer Guide (Guide) Bulletin on September 10 [PDF 81K], we announced changes to our temporary servicing requirements for eligible mortgages impacted by Hurricane Katrina and Hurricane Rita, and reminded Sellers that our June 4, 2007 Guide Bulletin [PDF 135K] extended our temporary selling requirements through December 31, 2007.

With this ninth special Katrina/Rita Bulletin, we continue to extend mortgage relief that preserves the dream of homeownership for borrowers in eligible Disaster Areas, while resuming many standard business operations in impacted areas reflective of ongoing assessments of recovery efforts.

For Servicers, our September 10 Guide Bulletin:

• Discontinued the application of the three-zone methodology we established in our February 10, 2006 Guide Bulletin [PDF 299K] for servicing mortgages owned by Freddie Mac. Effective October 1, 2007 Servicers no longer need to obtain Freddie Mac approval based solely on the location of the property for initiating or resuming foreclosure for properties located in eligible Disaster Areas and completing any lender-initiated property preservation work other than re-keying one entrance to a property under certain conditions.
• Effective October 1, 2007, Servicers should follow Guide requirements for managing properties that are distressed or are impacted by a disaster. These requirements are found in Guide sections 67.12 and 67.28 (distressed properties), and chapter 68 (properties impacted by a disaster).
• Extended the expiration date for the remaining previously announced temporary servicing requirements for mortgages secured by property in the eligible Disaster Areas to December 31, 2007, including:
  • Temporary credit reporting requirements
  • Streamlined underwriting requirements for loan modifications
  • Delegations of approval for short-payoffs
  • Continued ability to extend forbearance based on an individual assessment, and continued suspension of Guide requirements related to borrower documentation collection when determining eligibility for long-term forbearance
  • Temporary requirements for Electronic Default Reporting
  • Temporary payment history relief for borrowers requesting cancellation of borrower-paid mortgage insurance
• Reminded Servicers of factors to consider when extending forbearance, and our requirements for waiving prepayment penalties.

For mortgages secured by properties in the eligible Disaster Areas, for Sellers, we:

• Reminded Sellers that the previously announced temporary underwriting relief and flexibility for borrower credit reputation and capacity, and special LTV/TLTV/HTLTV ratio limits are effective through December 31, 2007, as announced in our June 4, 2007 Guide Bulletin [PDF 135K].
• Maintained the three-zone methodology without changes from the version published in our June 4, 2007 Bulletin with respect to temporary selling requirements.
• Reminded Sellers about temporary selling requirements for Home Possible® Mortgages, including the lifting of the area median income (AMI) limits for mortgages with note dates on or before December 31, 2007, and exemption of purchase transaction Home Possible Mortgages from the November 1, 2007 delivery fee rate increases, even though no AMI limit applies.
• Reminded Sellers that our temporary special collateral requirements for properties impacted by Hurricane Katrina and Hurricane Rita remain in effect until further notice.
• Reminded Sellers to deliver Special Characteristics Code (SCC) 821 for mortgages impacted by Hurricanes Katrina and Rita. In order to pay the reduced delivery fee rate for Home Possible Mortgages, beginning November 1, Sellers must also deliver SCC 140.

If you're servicing or originating mortgages secured by properties located in Hurricane Katrina or Rita eligible Disaster Areas, it is important that you thoroughly review the September 10 Guide Bulletin [PDF 81K] for complete details on the information above.

For more information

• Visit our updated Hurricane Katrina and Rita web page for more details and important information for Sellers and Servicers
• Contact your Freddie Mac representative or call (800) FREDDIE
• As a reminder, in the event of a disaster, refer to our disaster relief web page for information about our disaster policies and the initial steps you should take.