Freddie Mac New Mortgage Servicing Requirements
Effective on or after January 10, 2014
Freddie Mac has implemented new mortgage servicing requirements in response to the Consumer Financial Protection Bureau (CFPB) final rule under the Truth-in-Lending Act and Real Estate Settlement Procedures Act, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
At the direction of the Federal Housing Finance Agency (FHFA), Freddie Mac and Fannie Mae have worked closely with FHFA to assess the implications of the final rule in an effort to ensure Freddie Mac’s requirements and processes don’t conflict with the CFPB final rule.
Servicers Are Responsible for CFPB Final Rule Compliance
While Freddie Mac has established our servicing requirements in response to the CFPB’s final rule, Freddie Mac will not interpret CFPB regulations for Servicers or determine how Servicers should comply. Compliance with the CFPB final rule and other applicable laws is the Servicer’s responsibility.
Servicing Requirements for Delinquent Mortgages Secured by Primary Residences
We've created Single-Family Seller/Servicer Guide (Guide) Chapter 63, Delinquency Management on Mortgages Secured by Primary Residences, to provide guidance on communication and collection efforts, the appeals process, and foreclosure referrals and suspension.
- Collection Efforts. Generally, an initial borrower solicitation must be sent as early as the 31st day and no later than the 35th day of delinquency unless quality right party contact and borrower commitment to cure the delinquency has been obtained. Servicers may continue to use a loss mitigation tool for collection calls between the 3rd and 36th day of delinquency.
- The Appeals Process. New requirements are being introduced for the borrower’s appeals process for First Complete Borrower Response Packages (BRP) submitted 90 or more days prior to a foreclosure sale date or whenever a foreclosure sale date has not yet been scheduled. Refer to Guide Section 63.3 for these new requirements and Guide Exhibit 93, Evaluation Model Clauses, for updated evaluation model clauses.
- Foreclosure Referral Requirements. Servicers may no longer refer to foreclosure or take the first legal action in the foreclosure process any earlier than the 121st day of delinquency for mortgages secured by a Primary Residence, unless applicable law or one of the exceptions in Guide Section 66.9.1 permits earlier referral. However, Servicers must refer all mortgages secured by a Primary Residence with expired breach letters to foreclosure no earlier than the 121st day of delinquency and no later than five business days thereafter.
- Foreclosure Suspension Obligations. After referral to foreclosure, Servicers who receive a First Complete BRP more than 37 days prior to a foreclosure sale date must delay taking the first legal action until they have completed the review of the BRP, provided a decision to the borrower and the borrower’s acceptance and/or appeals period has expired. If the first legal action has been taken, Servicers must delay motion for judgment or order of sale until they have completed the review of the BRP, provided a decision to the borrower and the borrower’s acceptance and/or appeals period has expired. Review Guide Section 63.4 for more details.
Servicing Requirements for All Mortgages
- BRP Acknowledgement. Within five business days of BRP receipt, Servicers must confirm in writing to borrowers that they’ve received the BRP.
- Error Resolution. Freddie Mac has replaced our case escalation requirements with new error resolution requirements, giving Servicers more flexibility to promptly resolve errors and address borrower inquiries.
- Forbearance Plans. Servicers are now required to obtain a complete BRP from borrowers being considered for and offered a disaster-related forbearance plan exceeding six months. If this isn’t possible, Servicers may extend a successive disaster forbearance plan by an additional six months (not to exceed 12 months combined).
- Pre-Referral to Foreclosure. Servicers now have up to 15 days to complete their pre-referral review prior to foreclosure referral. We’ve also eliminated the requirement for Servicers to postpone foreclosure referral for up to 10 days if a complete BRP is received.
Please refer to the Guide for complete information relating to the new mortgage servicing requirements. In addition, we recommend you review related announcements and the resources we've developed to help you become familiar with the new mortgage eligibility requirements.
- New Regulatory Requirements for Sellers and Servicers
- FAQs on mortgage servicing requirement changes as a result of CFPB final ruling
- CFPB website
- The CFPB Mortgage rules at a glance
Training & Education
Servicers should visit the Learning Center for Servicing training information and resources.
Freddie Mac and Fannie Mae have worked collaboratively at the direction of the Federal Housing Finance Agency to develop these new mortgage servicing requirements