Notifying Freddie Mac When Homeowners Request a P&I Recast
Did you know we've clarified our Single-Family Seller/Service Guide (Guide) language around partial prepayments (P&I recasts)? Our goal is to make the reporting process as clear as possible.
P&I recasts start with borrowers who make a principal curtailment to their loans and request a re-amortization in order to then ask for a lower monthly P&I payment. In these cases, Servicers may allow borrowers to recast their loans with a modification agreement (not to be confused with a hardship loan modification), which re-amortizes the loan over the remaining term. Guide Section 8103.7 contains detailed instructions for preparation of the modification agreement.
Servicers are required to let Freddie Mac know about the new P&I payment by submitting Single-Family Seller/Service Guide (Guide) Form 1102, Modified Principal and Interest Payment to your Investor Reporting representative- before the last business day of the month of the new payment. We need to ensure that remitted funds are consistent with the expected P&I payment.
So the most expeditious thing you can do to limit processing delays when homeowners request a P&I recast is to submit Form 1102.
Once you do, we're able to process the curtailment and update the P&I payment in our system.