Freddie Mac Standard Deed-in-Lieu
When a home retention option or Freddie Mac Standard Short Sale are not workable solutions for at-risk homeowners, the Freddie Mac Standard Deed-in-Lieu (Deed-in-Lieu) offers them another opportunity to avoid foreclosure. The Deed-in-Lieu requirements are intended to facilitate a faster and more efficient process. Borrower relocation assistance helps struggling homeowners transition to more affordable housing. The Deed-in-Lieu is effective for new borrower evaluations conducted on or after March 1, 2013.
- Standardizes the process for a deed-in-lieu foreclosure alternative as part of the Servicing Alignment Initiative.
- Extends eligibility to every borrower, across all levels of delinquency, if they meet specific requirements.
- Implements consistent borrower response communication time frames to help facilitate Deed-in-Lieu transactions.
- Offers relocation assistance to borrowers who are not required to make a financial contribution toward the deficiency and who occupy the mortgaged premises as their primary residence.
- Requires Servicers to obtain an interior property inspection no more than 48 hours before final execution of the deed.
- Requires borrowers to sign a waiver of ownership of personal property left behind.
- Increases the incentive paid to Servicers for a completed Deed-in-Lieu.
- Accelerates the decisioning process to more quickly reach agreements with at-risk borrowers.
- Expands eligibility for a Deed-in-Lieu to a greater number of homeowners.
- Simplifies the process for a deed-in-lieu foreclosure alternative for Servicers and their customers by standardizing requirements and processes.
- Encourages homeowners to leave properties in good condition, reducing the time required to list and sell properties, and potentially revitalizing neighborhoods more quickly.
- Increases the Deed-in-Lieu incentive paid to Servicers from $275 to $1,500.
- Offers borrowers who meet certain requirements relocation assistance of up to $3,000.
The Deed-in-Lieu is effective for new Deed-in-Lieu borrower evaluations conducted on or after March 1, 2013.
Servicer Delegated Authority
Servicers may approve a Deed-in-Lieu that meets Single-Family Seller/Servicer Guide (Guide) requirements for eligible borrowers who:
- Are 90 or more days delinquent.
- Are current or less than 90 days delinquent if the borrower’s eligible hardship involves death of a borrower or primary or secondary wage earner in the household; or long-term or permanent disability or serious illness of a borrower/co-borrower or dependent family member.
- Do not have an eligible hardship, but were previously discharged from the debt obligation in a Chapter 7 bankruptcy.
Interior Property Inspection
Servicers must obtain an interior property inspection no more than 48 hours prior to final execution of the deed.
Communication Time Lines
Servicers must comply with specified time lines for Deed-in-Lieu communications with borrowers and for obtaining an executed deed.
Subordinate Lien Payments
Servicers may authorize payment of up to an aggregate $6,000 to subordinate lien holders in exchange for a lien release and extinguishment of the indebtedness secured by the mortgaged premises. Servicers will have the discretion to divide the payment among subordinate lien holders in order to maximize the chances that all subordinate lien holders will release their liens and extinguish the debts, provided that the aggregate payout does not exceed $6,000.
Provides all borrowers, regardless of delinquency status, with eligibility for a Deed-in-Lieu if:
- The Servicer complied with the evaluation hierarchy.
- The borrower has an eligible hardship.
- The borrower can convey clear and marketable title to the property.
- A borrower who is current or less than 31 days delinquent occupies the premises and their current monthly debt payment-to-income ratio is greater than 55 percent.
Borrower Relocation Assistance
Provides borrowers who are eligible for a Deed-in-Lieu, occupy the mortgaged premises, and are not required to make a financial contribution toward the deficiency with the potential to receive up to $3,000 in relocation assistance.
The property must be vacant and broom-swept or the relocation assistance is reduced by the cost of cleaning and repair.
Borrower Personal Property Release
Borrowers must sign a form at execution that waives ownership of personal property left on or in the mortgaged premises.
Single-Family Updates and News Articles
- November 15, 2012 – Freddie Mac Standard Deed-in-Lieu Announced in Guide Bulletin 2012-27
- Refer to Single-Family Seller/Servicer Guide (Guide) Sections 64.6, B65.43 through B65.48, 65.17(a), 65.42, and Exhibits 93 and 100.
- Read Guide Bulletin 2012-27, dated November 15, 2012.
- Contact your Freddie Mac representative.
- Print the Freddie Mac Standard Deed-in-Lieu Fact Sheet.
- Register for our new webinar for Servicers: Bulletin 2012-27: Freddie Mac Standard Deed in Lieu of Foreclosure.