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Mortgage Payment Relief

(New as of December 22, 2005)

Given the widespread devastation caused by Hurricane Katrina and Hurricane Rita, we amended our special disaster relief policies with our October 7 Single-Family Seller/Servicer Guide (Guide) Bulletin to provide immediate relief to those borrowers who have been most significantly impacted by these events.

As a result of our ongoing work with Servicers to evaluate our servicing requirements for the most effective solutions for affected borrowers, we further augmented our disaster relief policies with our December 22 and November 30 Guide Bulletins by extending the foreclosure suspension period and offering additional relief options to those affected by the hurricanes. Please see the December 22 Guide Bulletin [PDF 105K] and November 30 Guide Bulletin [PDF 40K] for complete details.

Special disaster relief polices regarding immediate mortgage payment relief, originally announced with our October 7 Guide Bulletin, include:

Effectively immediately, we are suspending mortgage payments for September, October and November, for all borrowers whose property is located in the Major Disaster Areas qualifying for Individual Assistance as designated by FEMA. Freddie Mac Servicers:

Must suspend the automated clearinghouse (ACH) process for payments due for September, if not drafted, and October and November.

If a borrower notifies a Servicer not to suspend ACH drafting, the Servicer must comply with the borrower's request.
By the end of September, Servicers must make a reasonable attempt to contact the borrower to determine if the borrower wishes to have the ACH drafting resumed.

May reverse September payments, at their discretion, already made via ACH and credit the payment back to the borrower's draft account. If the payment has already been reported to Freddie Mac, Servicers should contact us for further guidance. Servicers must return payments to borrowers when contacted by the borrower and specifically requested to return the payment. In addition, unless the borrower contacts the Servicer to make other arrangements, the Servicer must consider the borrower to have accepted a forbearance of the September payment.
Return to a borrower, at their discretion, any non-ACH monthly payments as well as partial prepayments of principal received from the borrower and not yet reported to Freddie Mac for September, October and November. This is provided that the Servicer has confirmed directly with the borrower that the borrower is in hardship and desires to have the payment returned. If the payment has already been reported to Freddie Mac, the Servicer should contact us for further guidance.
Must return non-ACH payments to the borrower if the borrower contacts the Servicer and specifically requests the payment to be returned. If the payment has already been reported to Freddie Mac, the Servicer should contact us for further guidance. Note that this does not apply to full prepayments of principal received from a borrower. Full prepayments of principal must be reported and remitted to Freddie Mac.
o Must suspend all payment collection activities, including automated dialers and collections calls. Instead, Servicers should focus efforts on ascertaining borrowers’ current situations and extent of property damage. In addition, Servicers should suspend all foreclosure proceedings, including foreclosure referrals and eviction proceedings, during September, October and November (extended to February 28, 2006 with the November 30 Guide Bulletin [PDF 40K] ), even if the mortgage was in default prior to Hurricane Katrina or Hurricane Rita.
Must not assess late charges or report borrowers to credit repositories for payments suspended or reversed for September, October and November.

Servicers will need to report and remit interest for the suspended payments for September, October and November, in accordance with the usual reporting and remitting processes. This is effective with the September reports.

At the end of the suspension of payments, Servicers should perform an individual assessment of each mortgage to determine if forbearance for up to an additional nine months, in the form of a suspension or reduction of payments, should be extended. If the Servicer believes forbearance beyond a total of 12 months is warranted, they should make that recommendation to us for consideration. Servicers may also use existing workout options to reinstate borrowers ready to resume mortgage responsibilities.

For complete details on these changes, please see the October 7 Guide Bulletin [PDF 223K].