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Investor Reporting Change Initiative

Frequently Asked Questions

General

  1. Why are you making these investor reporting changes?
  2. What's the effective date for these changes?
  3. What benefits will this initiative provide me?
  4. What are potential hurdles to implementing these changes?
  5. What action(s) do I need to take now that you've announced this initiative?
  6. Will you provide training in advance of the implementation date?
  7. How will I know if my service bureau is ready to implement these changes?
  8. What month does cutover take place?

Reporting Activities

  1. What if the P&I Determination Date falls on a weekend or a holiday, will it be the next business day?
  2. Will delinquency reporting for defaults, foreclosures and bankruptcies change?
  3. How will my reporting activities be impacted if DDLPI via loan-level reporting will be considered the source of record for determining delinquency?
  4. How will reinstatements occur once these changes are implemented?
  5. If I report incorrectly on the P&I Determination Date (15th), and make a revision by the end of the month, when will the cash adjustment be made?
  6. If I choose to not report daily, do I still need to report both on the P&I Determination Date and the end of the month?
  7. Will the daily loan file be the same as the monthly loan file for reporting?
  8. Will scheduled interest be reported after every principal collection in the reporting cycle?
  9. What is the process to request approval of negative principal reduction?
  10. Will all payments reported from after the P&I Determination Date through end of the month need to be reported as revisions?
  11. Will you accept reporting of newly funded loans during the cutover month?
  12. How should a payment be handled if I receive notification of insufficient funds in a future cycle?
  13. Is there an exception code required for partial reinstatements?
  14. If I don’t report code 40 (inactivation) in the fourth month of delinquency, will Freddie Mac automatically inactivate the loan?
  15. Can the terms of a loan modification be changed after settlement directly in my investor reporting?
  16. Will Form 1102: Modified Principal and Interest Payment still be required to report a recast?
  17. How do I pay off a short sale or a third-party foreclosure sale for the entire principal balance without receiving the adjustment(s) first?New

Remittance

  1. Will Freddie Mac change the remittance options for existing loans?
  2. Is there a cutoff date when I'll no longer be able to take out commitments in the Freddie Mac Selling System® using the current remittance cycle(s)?
  3. Will reporting on the interest portion of monthly P&I payments change when this initiative is implemented?
  4. Can you clarify how principal payments reported between the 16th and the end of the cutover month will be remitted?
  5. How will we receive Detailed Adjustment Report (DAR) adjustments when drafting is implemented?
  6. Will all payoffs due on a specific day be drafted in aggregate or on an individual basis?
  7. Will I be required to remit payments daily if I use the daily reporting option?

Reporting

  1. Will the Seller/Servicer Remittance Analysis Report change?
  2. Will there be a loan-level draft report available daily?

Payoffs

  1. Will any changes be made to the current payoff practices?
  2. Will I be able to reverse a payoff before or after a cycle has closed?
  3. Are there any changes relating to Payoff Accelerated Remittance Cycle (PARC) loans?

Industry (Other)

  1. Will borrower activities be impacted by the changes you're making?
  2. What are the potential impacts if the Single Security launches prior to your investor reporting changes?
  3. How is the upcoming Single Security going to work, since Freddie Mac and Fannie Mae securities are currently very different?

Technology

  1. How will Servicers who use Service Loans application be impacted?
  2. Will the Service Loans application be converted to real-time processing versus the current overnight process?

Customer Testing – NEW

  1. How will testing registration be accessible?

Cutover & Conversion – NEW

  1. When is the last time a Servicer, or service bureau, can report P&I under the current remittance process?
  2. When will Gold, ARC, Super ARC or First Tuesday remittance cycles be sunset?
  3. For the P&I Determination Date, what is the cutoff times for all the time zones?
  4. On the day of cutover, what is the specific time for cutover?
  5. What is forecasted scheduled interest?

General

  1. Why are you making these investor reporting changes?
    These changes streamline investor reporting and remitting processes as well as create operational efficiencies for you. The Investor Reporting Change Initiative represents our strategic vision to convert our Single-Family investor reporting requirements closer to an industry standard.
  2. What's the effective date for these changes?

    This is a multi-year initiative that will be fully implemented in May 2019. Stay updated by visiting our web page and, as always, we'll notify you ahead of time once we've established a definitive implementation date. Make sure you're signed up to receive servicing news via our Subscription Center.
  3. What benefits will this initiative provide me?

    You'll notice several benefits once these changes are implemented in May 2019, including:

    • Simplified reporting and processes with an industry standard reporting cycle.
    • Ability to report loan status, and revisions, on a daily basis.
    • More efficient remittance structure and schedule.
    • Improved data quality and faster feedback due to the single source of loan data through investor reporting. 
  4. What are potential hurdles to implementing these changes?
    This initiative will require changes to your and/or your service bureau’s (if applicable) technology, internal processes, and reporting. There may be financial costs to implement the new reporting cycle and remittance process.
  5. What action(s) do I need to take now that you've announced this initiative?

    Review the latest announcements:

    • Guide Bulletin 2016-15.
    • Resources such as the Business Requirements and Technical Specifications
    • For updates, sign up for servicing Single-Family Update emails via our Subscription Center.
  6. Will you provide training in advance of the implementation date?
    Yes, as we get further along in this initiative we'll provide reference guides, job aids and instructor-led webinars to help you prepare for these changes. All training will be posted to the Investor Reporting Change Initiative web page, as well as on our Learning Center.
  7. How will I know if my service bureau is ready to implement these changes?
    We’ve directly engaged several service bureaus that work with many of our customers. As your partner in this initiative, we’ll continue to do so throughout the implementation lifecycle. However, as the service bureau is your vendor, we encourage you to reach out to them and begin discussions on these changes directly, as soon as you can.
  8. What month does cutover take place?
    The cutover month is May 2019.

Reporting Activities

  1. What if the P&I Determination Date falls on a weekend or a holiday, will it be the next business day?
    If the 15th day of the month falls on a weekend or holiday, the P&I Determination Date will be the following business day.
  2. Will delinquency reporting for defaults, foreclosures and bankruptcies change?

    We don’t anticipate any changes at this time.
  3. How will my reporting activities be impacted if DDLPI via loan-level reporting will be considered the source of record for determining delinquency?
    Your delinquency reporting will not change. However, in the future we’ll be changing the DDLPI edits you receive in Loan Level Reporting.
  4. How will reinstatements occur once these changes are implemented?
    You'll need to reinstate the loan from foreclosure in Investor Reporting only and will no longer need to reinstate the loan in EDR (EDR code 20 (Reinstatement)). Also, you’ll no longer have to report an updated foreclosure referral date to place the loan back in foreclosure status in EDR.
  5. If I report incorrectly on the P&I Determination Date (15th), and make a revision by the end of the month, when will the cash adjustment be made?
    Your draft will be adjusted in the following cycle.
  6. If I choose to not report daily, do I still need to report both on the P&I Determination Date and the end of the month?
    You need to report on every loan by the P&I Determination Date of the month. If necessary, report any revisions by the first business day of the following month.
  7. Will the daily loan file be the same as the monthly loan file for reporting?
    The file format has not changed with daily reporting.
  8. Will scheduled interest be reported after every principal collection in the reporting cycle
    Yes, the scheduled interest amount due will be reported based upon the ending UPB of the current cycle.

    If there are multiple payments made on a single loan during the month, you must report a revised cumulative transaction, which includes all of the loan activity for the cycle.

    Example:

    Current cycle: November
    Borrower payment: Borrower sends payment on 11/1
    Servicer reporting: Servicer reports to Freddie Mac on 11/2
    Borrower prepayment: Borrower sends prepayment on 11/10
    Servicer reporting: On 11/11, Servicer reports to Freddie Mac the revised cumulative transaction that includes both principal payments and the next cycle scheduled interest based upon the current cycle ending UPB.

  9. What is the process to request approval of negative principal reduction?
    We'll convert the 708 edit into a warning and will accept negative principal reduction reporting.

    Upon completion of the current cycle, we'll provide a negative principal reduction report via the Service Loans application. You’ll be required provide the investor reporting representative the reason for the reversal if the amount is more than $3,000.
  10. Will all payments reported from after the P&I Determination Date through end of the month need to be reported as revisions?
    Yes, when revising a transaction, you must report all data elements related to the transaction, including what was initially submitted. The difference between the amount remitted and the revised amount reported after the 16th will be drafted/credited in the following month.
  11. Will you accept reporting of newly funded loans during the cutover month?
    Reporting of newly funded loans, including scheduled interest, will be accepted during the cutover month. Any newly funded loan not reported by the Servicer will be simulated with scheduled interest at no cost to the Servicer.
  12. How should a payment be handled if I receive notification of insufficient funds in a future cycle?
    With the exceptions of payoffs, a negative principal reduction in the next cycle is required to reverse the payment.
  13. Is there an exception code required for partial reinstatements?
    No exception code will be required for a partial reinstatement.
  14. If I don’t report code 40 (inactivation) in the fourth month of delinquency, will Freddie Mac automatically inactivate the loan?
    Yes, if you don't report code 40 in the fourth cycle of delinquency, Freddie Mac will inactivate the loan at the close of the current cycle. There will no longer be an option to keep loans active after the fourth month of delinquency.
  15. Can the terms of a loan modification be changed after settlement directly in my investor reporting?
    No, once a loan modification has settled, there can be no changes to the terms in your investor reporting. You must follow the post-modification process by submitting Form 1205: Post Settlement Correction Request for any corrections or adjustments to a settled loan modification.
  16. Will Form 1102: Modified Principal and Interest Payment still be required to report a recast?
    You'll no longer need to submit Form 1102 for a P&I recast. However, Form 1102 will still be required for a step-rate loan with multiple P&I constant changes associated with a curtailment accompanied by a recast.
  17. How do I pay off a short sale or a third-party foreclosure sale for the entire principal balance without receiving the adjustment(s) first? – New
    We'll post the full payoff amount due and offset the draft amount by the charge off adjustment if the short sale is settled by the Payoff Determination Date.

Remittance

  1. Will Freddie Mac change the remittance options for existing loans?
    Yes, the new remittance cycle will apply to all existing loans you service for Freddie Mac.
  2. Is there a cutoff date when I'll no longer be able to take out commitments in the Freddie Mac Selling System® using the current remittance cycle(s)?

    Yes, there will be a cutoff date but we have not determined that date yet. Please continue to check the web page for the latest updates. As always, we'll give you sufficient lead time to make any required changes.
  3. Will reporting on the interest portion of monthly P&I payments change when this initiative is implemented?
    Yes, you’ll report next cycle scheduled interest in the current month, based on the current cycle ending UPB.
  4. Can you clarify how principal payments reported between the 16th and the end of the cutover month will be remitted?

    Servicers will report payments received after the 15th of the cutover month through the last business day of the month to include the following data extended accounting cycle):

    • Additional principal payments received from the 16th of the month before cutover up to the end of the cutover month.
    • Updating principal payments, if necessary, from what was already reported prior to cutover.

    Example:
    Principal Reported after the cutoff of $100.00, and a pre-payment of $100.00 is collected after the call-in on the 25th. 
    The Servicer reports a total of $200.00 in principal on the 25th.

  5. How will we receive Detailed Adjustment Report (DAR) adjustments when drafting is implemented?

    All adjustments will be posted at the loan level on the DAR as well as on the Draft Report. Freddie Mac will draft the net amount due (inclusive of the adjustment).

    Example:
    If a loan modification settles prior to the P&I Determination Date, the adjustment will post on the P&I Determination Date and will offset the total amount to be drafted.

  6. Will all payoffs due on a specific day be drafted in aggregate or on an individual basis?
    Payoffs will be drafted in aggregate at the Servicer level. While the draft will be in aggregate, the Draft Report in SLA will show the loan-level detail for each payoff.
  7. Will I be required to remit payments daily if I use the daily reporting option?
    No, you won't be required to remit payments daily. Freddie Mac will draft P&I payments directly from the Servicer's account once a month, two business days after the P&I Determination Date. Payoffs will be drafted based on the remittance option.

Reporting

  1. Will the Seller/Servicer Remittance Analysis Report change?
    The Seller/Servicer Remittance Analysis Report will be eliminated and replaced with the Draft Report.
  2. Will there be a loan-level draft report available daily?
    Yes, a preliminary Draft Report will be available daily in the Service Loans application. The Draft report will be final for the cycle on the day after the P&I Determination Date. The report will be updated daily to account for all transactions reported to-date in the current cycle through the P&I Determination Date.

Payoffs

  1. Will any changes be made to the current payoff practices?
    Exception interest is no longer negative for payoffs between the 16th and month end. Payoff transactions may be revised during the cycle that the payoff was reported.
  2. Will I be able to reverse a payoff before or after a cycle has closed?
    You'll be able to reverse a payoff transaction in the current cycle, but no later than the first business day of the new cycle. Once the reporting cycle closes, the payoff cannot be reversed.
  3. Are there any changes relating to Payoff Accelerated Remittance Cycle (PARC) loans?
    The standard payoff remittance option is five business days, which has not changed. Non-standard remittance options such as PARC and Flex are fundamentally unchanged. PARC loans will appear on the Payoff Draft Report on their respective due dates.

Industry (Other)

  1. Will borrower activities be impacted by the changes you’re making?
    Exception interest is no longer negative for payoffs between the 16th and month end. Payoff transactions may be revised during the cycle that the payoff was reported.
  2. What are the potential impacts if the Single Security launches prior to your investor reporting changes?
    While they are related, the two projects do not require a concurrent launch. They’ll both be implemented in 2019.
  3. How is the upcoming Single Security going to work, since Freddie Mac and Fannie Mae securities are currently very different?
    With the Single Security, we're making changes to our securities to more closely align with Fannie Mae. This will help combine the liquidity of both Enterprises' TBA securities into one large market.

    A major component of our changes will be moving the payment delay on our securities from 45-day to 55-day. Once the Single Security is launched, each Enterprise will issue new 55-day Uniform Mortgage-Backed Securities (UMBS). Concurrently, we’ll offer an exchange feature to permit holders of 45-day PCs to exchange them for a Freddie Mac 55-day UMBS backed by the same loans.

    Freddie Mac will also make other minor changes, including adopting the same security prefixes, pool number format and factor calculation methodology as Fannie Mae. Fannie Mae will adopt a securities disclosure format similar to Freddie Mac’s, with some new data elements – unique to the Single Security – that both Enterprises will use.

Technology

  1. How will Servicers who use Service Loans application be impacted?
    Servicers using Service Loans application must review the investor reporting changes and business requirements and evaluate impacts to their organization (i.e. process, financial and operational).
  2. Will the Service Loans application be converted to real-time processing versus the current overnight process?
    It will not be real-time but we’ve increased the number of batch jobs that run during the day, so information is more current.

Customer Testing

  1. How will testing registration be accessible?
    We'll announce testing registration on the Investor Reporting Change Initiative website prior to the testing phase.

Cutover & Conversion

  1. When is the last time a Servicer, or service bureau, can report P&I under the current remittance process?
    Servicers, and service bureaus, can report under the legacy process until 9:00 p.m. on May 20, 2019. On May 21, 2019, you must report using the Standard Remittance Cycle.
  2. When will Gold, ARC, Super ARC or First Tuesday remittance cycles be sunset?
    All remittance types will sunset in May 2019. But we encourage customers with Super ARC and First Tuesday loans to convert to Gold before May 2019.
  3. For the P&I Determination Date, what is the cutoff times for all the time zones?
    On the P&I Determination Date, the reporting cutoff is 2:00 a.m. Eastern Time on the day following the P&I Determination Date. All transactions received by 2:00 a.m. Eastern Time without errors will be processed and drafted on the P&I Draft Date of the current Accounting Cycle.
  4. On the day of cutover, what is the specific time for cutover?
    The cutover strategy/business requirements specifies all details surrounding cutover.
  5. What is forecasted scheduled interest?
    When the initiative is implemented, you will forecast the next month's scheduled interest based on the current cycle ending UPB.

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