Freddie Mac Updates Several Servicing Policies

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On January 24, Freddie Mac issued Bulletin 2014-01, which updates and revises servicing requirements related to (i) step-rate mortgages; (ii) foreclosures; (iii) third-party use of Workout Prospector and BPOdirect; and (iv) electronic default reporting requirements. Effective April 1, 2014, servicers must provide notification of an initial interest rate adjustment for a step-rate mortgage to the borrower as early as 150 days, but no less than 90 days, prior to the first payment due date at the adjusted interest rate. A second notification of the initial interest rate adjustment must be provided as early as 75 days, but no less than 60 days, prior to the first scheduled payment at the new rate. For mortgages requiring two or more interest rate adjustments to reach the corresponding interest rate cap, servicers must provide borrowers written notification of the upcoming interest rate change for each subsequent rate adjustment as early as 120 days, but no less than 60 days, prior to the first payment due date at the re-adjusted rate. In addition, servicers’ staff must be adequately trained to discuss interest rate adjustments with borrowers. Among the foreclosure-related updates, the Bulletin provides notice to servicers regarding changes in state foreclosure time lines, updates requirements for reimbursement of costs associated with the posting and publication of foreclosure notices, and updates provisions for expediting default legal matters and foreclosure sale bidding. With regard to Workout Prospector and BPOdirect, effective immediately Freddie Mac is allowing authorized third-party service providers to access those tools. Finally, the Bulletin updates certain default action codes, which servicers must use beginning May 1, 2014.

Topics:  Foreclosure, Freddie Mac, Mortgages, Reporting Requirements

Published In: Finance & Banking Updates, Residential Real Estate Updates

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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