Freddie Mac Updates Selling, Servicing Policies

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On February 14, Freddie Mac issued Bulletin 2014-02, which includes numerous selling and servicing policy changes. For example, the Bulletin states that, effective for mortgages with settlement dates on or after June 1, 2014, (i) sellers’ reserves must be based on the full monthly payment amount for the property, not only principal, interest, taxes, and insurance; (ii) sellers no longer have to provide borrowers an additional six months’ reserve when the borrower converts a  two- to four-unit primary residence to an investment property; and (iii) Freddie Mac is removing the requirements that the appraisal must be dated no more than 60 days prior to the note date when used to document the value of a primary residence pending sale or being converted to a second home or an investment property for the purposes of establishing the minimum required reserves. Freddie Mac also is reducing the delivery fee rate to 75 basis points for Home Possible Mortgage purchase transactions with settlement dates on or after March 1, 2014. Also for sellers, the Bulletin (i) introduces a summary of changes made to Guide Exhibit 19, Postsettlement Delivery Fees; (ii) revises resubmission requirements for mortgages submitted to Loan Prospector after the note date or the effective date of Permanent Financing for Construction Conversion and Renovation Mortgages; (iii) updates the Guide to include Phase 2 ULDD data point requirements and clarifications on existing ULDD data points; and (iv) updates and consolidates property eligibility and appraisal requirements in Guide Chapter 44, Property and Appraisal Requirements. For sellers and servicers, the Bulletin announces updates to Guide Form 16SF, Annual Eligibility Certification Report, to enhance its usability and provide additional functionality. Finally, for servicers, the Bulletin revises requirements for reimbursement of condominium, homeowners’ association and Planned Unit Development assessments in states where a lien for such amounts can take priority over Freddie Mac’s lien.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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