Freddie Mac Standard Deed-in-Lieu

Key Features

Key Features

• 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 those borrowers who are not required to make a financial contribution toward the deficiency and who occupy the mortgaged premises as their primary residence.
• Servicers must conduct an interior property inspection no more than two business days following receipt of the executed deed and all related documents.
• Requires borrowers to sign a waiver of ownership of personal property left behind.

Key Benefits

• Accelerates the decisioning process to more quickly determine the borrower’s eligibility for a
  deed-in-lieu.
• Expands eligibility for a deed-in-lieu to a greater number of homeowners.
• Simplifies the process for a deed-in-lieu 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.
• Servicers may receive a $1,500 incentive for the successful completion of a deed-in-lieu.
• Offers borrowers who meet certain requirements relocation assistance of up to $3,000.

Effective Date

The deed-in-lieu is effective for new deed-in-lieu borrower evaluations conducted on or after March 1, 2013.

Servicers

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 conduct an interior property inspection no more than two business days following receipt of the executed deed and all related documents. Servicers must ensure that the property is undamaged, free of exterior and interior debris and in broom-swept condition.

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.

Borrowers

Borrower Eligibility

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.

Announcements

Guide Bulletins

• Guide Bulletin 2013-10
• Guide Bulletin 2012-27
• Guide Bulletin 2012-16

Single-Family Updates and News Articles

• June 14, 2013 – Guide Bulletin 2013-10 Updates Many Requirements to Help Improve Processes for Servicers
• November 15, 2012 – Freddie Mac Standard Deed-in-Lieu Announced in Guide Bulletin 2012-27