Co-Issue XChange gives you the option to work with your Servicing Buyer of choice, as long as you are approved by Freddie Mac. In this type of transaction, you negotiate a purchase and sale agreement (PSA) directly with each Servicing Buyer. The PSA may include:
- Mortgage Servicing Rights (MSR) pricing.
- Loan-level eligibility.
- Monthly volume requirements.
We offer co-issue transactions on a bifurcated or non-bifurcated basis. Bifurcation is the separation of selling representations and warranties from the servicing reps and warranties at the time of the Freddie Mac funding or settlement date.
Non-bifurcated. Non-bifurcated co-issue business follows guidelines from our Single-Family Seller/Servicer Guide (Guide). In this type of transaction the Servicer maintains both the selling and the servicing reps and warranties.
For more information, refer to Guide Chapter 7101.2, which outlines guidelines for a Concurrent Transfer of Servicing (CTOS). The Transferor/Seller and Transferor/Servicer must complete Form 960 Agreement for Concurrent Transfer of Servicing of Single-Family Mortgages.
Full bifurcation. In fully bifurcated co-issue transactions you retain the selling reps and warranties while the Servicer acquires the servicing reps and warranties. The reps and warranties are split apart forever, and Freddie Mac has no contractual right to move the Selling reps and warranties back to the Servicer. This type of transaction is often referred to as a "complete" or "true" bifurcation and requires pre-approval from Freddie Mac.
- Operational bifurcation. In this type of transaction, the selling and servicing reps and warranties are split apart, but Freddie Mac has the contractual right to move the selling reps and warranties back to the Servicer if Freddie Mac terminates or suspends the selling rep and warranty holder.
- Flexibility to choose your Servicing Buyers.
- The Servicing-Released premium is negotiated between the Seller and the Servicing Buyer.
- Avoid Servicing asset risk.
- Seller does not need a servicing operation.
- Seller maintains a direct relationship with Freddie Mac on quality control reviews and repurchase demands. (Bifurcated transactions only.)
- Ability to track the selling rep and warranty relief status in Loan Coverage Advisor®.