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Servicing Alignment Initiative FAQs

These frequently asked questions provide additional guidance on our default management requirements under this initiative, but are not a replacement or substitute for information found in the Single-Family Seller/Servicer Guide (Guide) or the terms of your Master Agreement and/or Master Commitment.

Servicing Alignment Initiative

  1. What is the Servicing Alignment Initiative and why is FHFA directing it?
  2. What are the aligned service areas?
  3. Can "dual-tracking" occur under the Servicing Alignment Initiative (in which foreclosure proceedings and loan modification activities are pursued concurrently)?
  4. Are your requirements exactly the same as Fannie Mae's?

Borrower Contact

  1. What are the requirements for contacting delinquent borrowers? 
  2. Do I need to satisfy each one of the defined quality right party contact (QRPC) attributes to fulfill the QRPC requirements?
  3. Are the QRPC requirements satisfied if I meet all of the QRPC attributes, but the borrower declines all offers for a foreclosure prevention alternative?
  4. Do payment receipts constitute a QRPC?
  5. Does it constitute as QRPC if a borrower accepts a phone call, but refuses to discuss their intent, reason for delinquency, or listen to the foreclosure avoidance options?
  6. Is the five-day calling rule for delinquent loans required for all loans?
  7. Do the "days" in the requirements to conduct calls every third day until QRPC is achieved include weekends and holidays?
  8. Can the solicitation letter and uniform borrower assistance form be sent separately to a delinquent borrower? 
  9. What are Freddie Mac's requirements for contacting and working with a borrower who has filed for bankruptcy? 
  10. May I send borrower communications through regular mail, or does it have to be certified mail? What about electronically? 
  11. If applicable law has different or more liberal requirements, should a Servicer follow applicable law?
  12. Do I need to document my efforts to review borrowers for alternatives to foreclosure based on the evaluation hierarchy defined in the Guide?
  13. When do error resolution procedures apply? 
  14. I service mortgages in areas that have state statutes that require a breach letter to be sent earlier in order to refer mortgages to foreclosure by the 120th day of delinquency. How should I handle this?
  15. Can I use an auto dialer for my collection call campaigns?

Borrower Solicitation and Response Packages

  1. May I use our proprietary solicitation package in lieu of the Borrower Solicitation Package?
  2. Does a borrower need to respond to a solicitation within 30 calendar days or 30 business days?
  3. If a borrower calls but does not have all the information they are required to provide, how does it affect the process and our progress?
  4. Is a complete Borrower Response Package required for short-term home retention options?
  5. Am I still required to evaluate a borrower if the borrower returns a complete Borrower Response Package after the 30-day response deadline?
  6. Is there a limit to the number of times that a borrower can be re-evaluated for an alternative to foreclosure if the borrower continues to provide new or updated information?
  7. What happens if I do not receive timely approval for non-delegated alternatives to foreclosure? 
  8. If I must complete a borrower evaluation before I order a BPO, what happens if day 30 approaches and I did not receive the BPO?

Foreclosure Timelines

  1. Will Freddie Mac set foreclosure timelines by county or MSA to account for areas within a state that take longer to process a foreclosure?
  2. Will I get a credit if I exceed Freddie Mac's foreclosure timeline requirements for a delay caused by obtaining a bankruptcy lift of stay or resolving other contested matters?
  3. Will I get a credit if I exceed Freddie Mac's foreclosure timeline requirements for a delay caused by a mandatory borrower mediation hearing? 
  4. Do Freddie Mac's requirements supersede any state requirements for foreclosure prevention actions? 
  5. If I'm unable to refer a loan to foreclosure by the timeframe required in the Guide because the borrower has submitted a Borrower Response Package that I'm considering for a workout, or because the response time for a foreclosure prevention offer has not expired, will the state foreclosure timelines be extended by a corresponding amount of time so I have longer to evaluate the borrower for a workout and/or so I can extend the offer period for a foreclosure alternative? 
  6. Should I proceed with a foreclosure sale if I receive a completed Borrower Response Package less than 15 days from the foreclosure sale date?
  7. Is there a required timing for providing certification to foreclosure to the attorney/trustee?
  8. Is it my responsibility as a Servicer to confirm that the attorney/trustee has received our foreclosure certification?

Incentives and Compensatory Fees

  1. How have incentives and compensatory fees changed?
  2. "Intra-state netting" is now used when calculating foreclosure timeline compensatory fees. What does this mean?
  3. Is there an appeals process for foreclosure timeline or other compensatory fees?
  4. Can I dispute the compensatory fees citing the state or court-related delays as part of the monthly compensatory fees appeal process? 
  5. Can I still make data corrections under the requirements?
  6. Are the limits on the incentives in a consecutive 12-month period? 

Servicing Alignment Initiative

  1. What is the Servicing Alignment Initiative and why is FHFA directing it?

    The Servicing Alignment Initiative is an FHFA-led effort to establish consistent policies and processes for servicing delinquent loans owned or guaranteed by Freddie Mac or Fannie Mae. The alignment will help Servicers resolve delinquencies more consistently and efficiently, keep more borrowers in their homes whenever possible, and minimize losses to the GSEs and taxpayers.
  2. What are the aligned service areas?

    The aligned servicing standards originally focused on four key areas: (1) borrower contact, (2) delinquency management practices, (3) loan modifications and alternatives to foreclosure, and (4) foreclosure timelines. Additional areas of alignment included short sales, deed-in-lieus of foreclosure, revisions to foreclosure counsel requirements, and addressing borrowers affected by disasters.  In addition, monetary incentives and compensatory fees were introduced and updated from time-to-time to promote effective Servicer execution in key defined areas.
  3. Can "dual-tracking" occur under the Servicing Alignment Initiative (in which foreclosure proceedings and loan modification activities are pursued concurrently)?

    Under the requirements, Servicers must engage in a single track for considering alternatives to foreclosure up to the date of foreclosure referral or the 120th day of delinquency, whichever is earlier except as required by applicable law (i.e. mortgages secured by Primary Residences). Also, prior to issuing a referral for foreclosure, the Servicer must perform a formal review of the case to confirm that the borrower has been considered for a foreclosure alternative consistent with the defined guidelines. Even after the foreclosure process has begun, Servicers must continue to work with homeowners on alternatives to foreclosure to ensure borrowers have additional opportunity to avoid foreclosure after the mortgage has been referred to foreclosure.
  4. Are your requirements exactly the same as Fannie Mae's?
    The GSEs have defined a common approach to loss-mitigation activities, and we are largely aligned in the defined default management areas. There are some differences between each GSE's operational implementation based on GSE-specific business needs.

Borrower Contact

  1. What are the general requirements for contacting delinquent borrowers?

    We have published requirements on standards and timelines for the following activities for contacting delinquent borrowers:
    • Collection contact attempts and call center standards
    • Establishing quality right party contact
    • Borrower Solicitation Packages
    • Written communication notices (i.e., late notices, acknowledgment of receipt of Borrower Response Packages, incomplete information notices, evaluation notices, and breach [notice of acceleration] letters)
    • Borrower Response Packages

    The emphasis is on early intervention, and we require earlier and more frequent borrower contact.
  2. Do I need to satisfy each one of the defined quality right party contact (QRPC) attributes to fulfill the QRPC requirements?

    A Servicer's objective in contacting a delinquent borrower is to establish quality right party contact. QRPC occurs when a Servicer establishes a rapport with the borrower, expressing empathy and a desire to help identify and discuss with the borrower, co-borrower or trusted advisor, such as a housing counselor, the most appropriate options for delinquency resolution. To meet the requirements you must make every attempt to achieve QRPC by:
    • Determining the reason for delinquency and whether such reason is temporary or permanent in nature.
    • Determining the borrower's ability to repay the mortgage debt.
    • Setting payment expectations and educating the borrower on the availability of foreclosure prevention alternatives as appropriate.
  3. Are the QRPC requirements satisfied if I meet all of the QRPC attributes, but the borrower declines all offers for a foreclosure prevention alternative?

    If you have made every attempt to achieve QRPC as defined in the Guide and the borrower declines all offers for a foreclosure prevention alternative, you have met the QRPC requirements. As always, it is important that you document your actions.
  4. Do payment receipts constitute a QRPC?

    No. Payment receipts do not constitute a QRPC.
  5. Does it constitute as QRPC if a borrower accepts a phone call, but refuses to discuss their intent, reason for delinquency, or listen to the foreclosure avoidance options?

    If you established contact with the borrower, expressed empathy and a desire to help, and made an attempt to discuss and collect the information necessary to determine the most appropriate options for delinquency resolution, then the Servicer has achieved QRPC.
  6. Is the five-day calling rule for delinquent loans required for all loans?

    Servicers must initiate contact attempts with each delinquent borrower by the 36th day after the due date. Servicers may start earlier, but must start no later than day 36. Servicers may use the results of their own methodology or a loss mitigation tool to determine which Borrowers to conduct contact attempts earlier than day 36. Regardless of the methodology or tool employed, Servicers must comply with the minimum collection time frames even if a collection and loss mitigation tool is used, including initiating contact attempts no later than 36 days after the payment due date.

    The Servicer must continue contact attempts at least every fifth day until the earlier of the 210th day of delinquency or QRPC is achieved and:

    • Servicer achieves quality right party contact and determines that the borrower is not interested in an alternative to foreclosure,
    • Delinquency is cured,
    • Servicer achieves quality right party contact and has obtained from the borrower a promise to pay the delinquent amount by a specified date (not to exceed 30 days)
    • Complete Borrower Response Package is received in accordance with Guide Section 9102.5 & 9201.2 to evaluate the borrower for an alternative to foreclosure, OR
    • Borrower enters into a relief or workout option with the Servicer.
  7. Do the "days" in the requirements to conduct borrower contact attempts every fifth day until the earlier of the 210th day after the due date or QRPC is achieved include weekends and holidays?

    Yes, weekends and holidays are included in the five-day contact requirements for establishing QRPC. However, you are able to make contact attempts to delinquent borrowers on the next business day if the day you are required to contact the borrower falls on a non-business day and you are not open to conduct loss mitigation and collection activities.

    In the Guide, the word "day" without the modifier "business" refers to a calendar day. A "business day" is defined as a day other than (1) a Saturday or Sunday, (2) a day on which the Federal Reserve Bank of New York is authorized or obligated by law or executive order to remain closed, or (3) a day on which the offices of Freddie Mac are closed.
  8. Can the solicitation letter and uniform borrower assistance form be sent separately to a delinquent borrower?

    Yes. Servicers may choose to send only the solicitation letter and elect to send the required uniform borrower assistance form and other required documentation upon establishing QRPC.
  9. What are Freddie Mac's requirements for contacting and working with a borrower who has filed for bankruptcy?

    A Servicer is not required to solicit a borrower in an active Chapter 7 or Chapter 13 bankruptcy. However, a borrower in active Chapter 7 or Chapter 13 bankruptcy, or whose mortgage has been discharged under Chapter 7 bankruptcy, must be considered for an alternative to foreclosure if the borrower, the borrower's counsel or bankruptcy trustee (with the borrower's written consent) submits a request to the Servicer. Additionally, you must comply with applicable law when contacting borrowers in bankruptcy.
  10. May I send borrower communications through regular mail, or does it have to be certified mail? What about electronically?

    You may send and receive your Borrower Response Packages through regular mail or electronically. For complete requirements, refer to Guide Sections 1401 & 1401.17 and 9102.5(d).
  11. If applicable law has different or more liberal requirements, should a Servicer follow applicable law?

    As always, Servicers must comply with all requirements under applicable law with respect to all of its Servicing activities.
  12. Do I need to document my efforts to review borrowers for alternatives to foreclosure based on the evaluation hierarchy defined in the Guide?

    You should keep appropriate documentation in the mortgage file that demonstrates your efforts to assess a borrower's alternatives to foreclosure. The hierarchy is designed to ensure that the least costly home retention options are offered prior to a HAMP modification, which must be offered prior to the Freddie Mac Standard Modification, as applicable. Servicers must send eligible Borrowers a solicitation letter (e.g., Form 1191) and Streamlined Modification Trial Period Plan no later than the 105th day of delinquency. Servicers may also include the appropriate system notes to document their efforts.
  13. When do error resolution procedures apply?

    If a customer complaint or borrower communication reaches you and that complaint or communication asserts an error relating to the Servicing of a mortgage, then the error resolution procedures apply, no matter how or where that borrower complaint or communication arrived at your shop.  
  14. I service mortgages in areas that have state statutes that require a breach letter to be sent earlier in order to refer mortgages to foreclosure by the 120th day of delinquency. How should I handle this?

    If state law requires a breach letter to be sent prior to the 60th day of delinquency in order to be able to refer the mortgage to foreclosure by the 120th day of delinquency, you must send the breach letter on the earlier date. Servicers are reminded that they must comply with requirements governing Primary Residences to refer no earlier than day 121 unless certain exceptions apply. See Guide Sections 9101.2(b), 9102.4, and 9301.6 & 9301.7.
  15. Can I use an auto dialer for my collection call campaigns?

    Yes, provided that a live agent will pick up the call if a connection is made.

Borrower Solicitation and Response Packages

  1. May I use our proprietary solicitation package in lieu of the Borrower Solicitation Package?

    You may use the solicitation templates that Freddie Mac provides or customized equivalents that provide a comparable level of detail. In all instances, the Borrower Solicitation Package sent to the borrower must include the complete set of documents and content specified in the Guide and otherwise comply with applicable law.
  2. Does a borrower need to respond to a solicitation within 30 calendar days or 30 business days?

    The borrower must respond to the Borrower Solicitation Package within 30 calendar days, unless the 30th calendar day falls on a non-business day, in which case the response date is moved to the first business day after the 30th calendar day. However, if a borrower fails to respond, they are not precluded from submitting a complete Borrower Response Package to the Servicer at a later date, in which case a Servicer must consider that borrower for an alternative to foreclosure, except in certain limited instances (e.g., a foreclosure sale is imminent and there is insufficient time to review the borrower's later submission).
  3. If a borrower calls but does not have all the information they are required to provide, how does it affect the process and our progress?

    If the borrower does not have the required information, the Servicer must continue to follow up with the borrower until a complete Borrower Response Package is received in order for the Servicer to evaluate the borrower for an alternative to foreclosure.
  4. Is a complete Borrower Response Package required for short-term home retention options?

    No, not every reinstatement or relief option in Chapter 9203 requires you to obtain a complete Borrower Response Package to evaluate the borrower. Refer to Chapter 9203 for the documentation requirements specific to each option. However, you must comply with applicable law, including, but not limited to any requirements to perform due diligence to obtain a complete Borrower Response Package (e.g. towards the end of a forbearance period).
  5. Am I still required to evaluate a borrower if the borrower returns a complete Borrower Response Package after the 30-day response deadline?

    If a borrower fails to respond by the 30-day response deadline, the borrower may still submit a complete Borrower Response Package at a later date. You must consider that borrower for an alternative to foreclosure, except in certain limited instances (e.g., a foreclosure sale is imminent, and there is insufficient time to review the borrower's later submission – See Guide Section 9102.5 (c)(5) and Guide Section 9301.44). In addition, you must still meet the required time frames for sending an acknowledgement of the Borrower Solicitation Package (five business days), an incomplete notice (five business days), and/or the evaluation decision (30 days) after receiving the Borrower Response Package. Servicers may, but are not required, unless required by applicable law, to send a notice of incompleteness when an incomplete Borrower Response Package arrives within 37 days or less prior to a scheduled foreclosure sale. However, you are strongly encouraged to work with such borrowers to complete the package.
  6. Is there a limit to the number of times that a borrower can be re-evaluated for an alternative to foreclosure if the borrower continues to provide new or updated information?

    No. There is no limit provided that the borrower submits a complete Borrower Response Package for each evaluation.

  7. What happens if I do not receive timely approval for non-delegated alternatives to foreclosure?

    You must manage your file to ensure that there is sufficient time to request any necessary approvals from Freddie Mac or third parties, such as the mortgage insurer, so you can provide a response to the borrower no later than 30 days from receiving the complete Borrower Response Package.

    Freddie Mac will take into consideration, on a case-by-case basis, documented circumstances where a review conducted by a third party or Freddie Mac caused you to exceed the 30-day time frame.
  8. If I must complete a borrower evaluation before I order a BPO, what happens if day 30 approaches and I did not receive the BPO?

    If an AVM value is not available, you should immediately order the BPO as soon as you receive a complete Borrower Response Package. If the BPO value does not arrive within 30 days of receiving the complete Borrower Response Package, you may refrain from making a final decision, except as necessary to comply with applicable law.

Foreclosure Timelines

  1. Will Freddie Mac set foreclosure timelines by county or MSA to account for areas within a state that take longer to process a foreclosure?

    No. We are issuing state standards for meeting foreclosure timelines. Specifically, our foreclosure timelines are based on the number of days from the due date of the last paid installment on the mortgage until the foreclosure sale occurs. The timelines are state-specific and are aimed to align more closely with actual foreclosure processing timelines in each state.
  2. Will I get a credit if I exceed Freddie Mac's foreclosure timeline requirements for a delay caused by obtaining a bankruptcy lift of stay or resolving other contested matters?

    You have up to 80 days for each Chapter 7 bankruptcy filing and up to 125 days for each Chapter 13 bankruptcy filing to obtain relief from the stay. If you believe that a delay in these instances was beyond your control, you may submit an appeal to Freddie Mac with appropriate supporting documentation within 30 days of the publication of the compensatory fee being assessed.

    As a reminder, the Monthly Compensatory Fee Analysis Report of the prior month's estimated state foreclosure timeline compensatory fees will be available in the Servicer's Servicer Performance Profile (SPP) on the fifth business day of the following month. You must review the report each month and have 30 days from the date of the report's publication to submit an appeal for the prior month's estimated compensatory fees.
  3. Will I get a credit if I exceed Freddie Mac's foreclosure timeline requirements for a delay caused by a mandatory borrower mediation hearing?

    If you believe that the delay has been beyond your control, you can submit an appeal to Freddie Mac with appropriate supporting documentation.
  4. Do Freddie Mac's requirements supersede any state requirements for foreclosure prevention actions?

    Servicers must always comply with applicable law when engaged in any servicing activities for Freddie Mac mortgages. Where requirements overlap, Servicers must comply with the shorter time frame. Servicers should make every effort to meet Freddie Mac's timeline requirements regardless of state requirements. Efforts may include sending state-required documentation, such as a breach or notice of acceleration letter, earlier in the delinquency in order to meet Freddie Mac's timelines.
  5. If I'm unable to refer a loan to foreclosure by the timeframe required in the Guide because the borrower has submitted a Borrower Response Package that I'm considering for a workout, or because the response time for a foreclosure prevention offer has not expired, will the state foreclosure timelines be extended by a corresponding amount of time so I have longer to evaluate the borrower for a workout and/or so I can extend the offer period for a foreclosure alternative?

    While a mortgage cannot be referred to foreclosure in either of the instances mentioned above, the foreclosure timelines will not be extended in either case. It is a Servicer's responsibility to secure a complete Borrower Response Package in a timely manner so that evaluations and foreclosure alternative offers can be processed within the designated timelines. However, if you believe that the delay was been beyond your control, you can submit an appeal to Freddie Mac with appropriate supporting documentation.
  6. Should I proceed with a foreclosure sale if I receive a completed Borrower Response Package less than 15 days from the foreclosure sale date?

    You should make the determination whether it is possible to review the Borrower Response Package in time to provide the foreclosure certificate as referenced in question #67. If you review the Borrower Response Package and you offer a foreclosure alternative to the borrower, the borrower has 14 days to respond. As such, if a foreclosure sale is scheduled within that 14-day time period, you must postpone the foreclosure sale to allow the borrower the time to respond.
  7. Is there a required timing for providing certification to foreclosure to the attorney/trustee?

    At least seven, but no more than 15 days prior to the foreclosure sale, you must review the account and send written certification to the attorney/trustee indicating that the foreclosure sale must continue unless certain conditions exist.
  8. Is it my responsibility as a Servicer to confirm that the attorney/trustee has received our foreclosure certification?

    Yes, it is the Servicer's responsibility to confirm attorney/trustee receipt of the foreclosure certification.

Incentives and Compensatory Fees

  1. How have incentives and compensatory fees changed?

    Our incentives and compensatory fees focus on rewarding Servicers for meeting quality benchmarks, and assessing compensatory fees for Servicers who fail to meet our foreclosure timelines. These include: Workout incentives, including existing incentives for a workout and incentives for the Freddie Mac Standard and Streamlined Modifications, and the Standard Short Sale and Standard Deed-in-lieu.
  1. "Intra-state netting" is now used when calculating foreclosure timeline compensatory fees. What does this mean?

    "Intra-state netting" means that foreclosure sales completed faster than the foreclosure timeline offset loans exceeding the timeline in the same state for the same month. However, if the intra-state netting results in a negative calculation for the same state in the same month, we will not transfer that negative calculation or "credit" to the calculations of your performance in other states or for other months in the same state.
  2. Is there an appeals process for foreclosure timeline or other compensatory fees?

    The Servicer may appeal a pending compensatory fee prior to Freddie Mac billing the fee.

    The Monthly Compensatory Fee Analysis Report of the prior month's estimated state foreclosure timeline compensatory fees will be available in the Default Reporting ManagerSM on the fifth business day of the following month. The Servicer must review the report each month, and if they believe a compensatory fee listed on their report is incorrect, the Servicer has 30 days from the date of the report's publication to submit an appeal.

    Example: A foreclosure sale occurs in October for which the Servicer has exceeded Freddie Mac's state foreclosure timeline as listed in Exhibit 83, Freddie Mac State Foreclosure Timelines, and is subject to a compensatory fee. The Servicer must access the Monthly Compensatory Fee Analysis Report in the Servicer Performance Profile (available on the fifth business day in November). The Servicer then has 30 days from the fifth business day to submit an appeal to Freddie Mac (see Directory 5).
  3. Can I dispute the compensatory fees citing the state or court-related delays as part of the monthly compensatory fees appeal process?

    Yes. If you believe a delay was beyond your control, you must submit adequate documentation that supports your claim(s) in your appeal.
  4. Can I still make data corrections under the requirements?

    Servicers should, and will be allowed to, submit data to correct reporting discrepancies. However, adjustments will be made to foreclosure timeline compensatory fees only if the corrected or missing data is reported within 30 days of the Monthly Compensatory Fee Analysis Report and is submitted as part of a Servicer's timely appeal of the compensatory fee.
  5. Are the limits on the incentives in a consecutive 12-month period? 

    If an incentive is received for a given loan, that loan will not be eligible for another incentive until six months after the first incentive. Additionally, only two incentive payments are allowed for the life of the loan.

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