Freddie Mac Updates Short Sale, Deed-In-Lieu Of Foreclosure Requirements

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On November 25, Freddie Mac issued Bulletin 2013-24, which revises numerous short sale and deed-in-lieu of foreclosure (DIL) requirements. The bulletin updates, among other things, eligibility requirements for exceptions to borrower documentation for short sales and DILs by (i) permitting a borrower whose mortgage debt has been discharged in a Chapter 7 bankruptcy to be eligible for an exception to documentation, regardless of FICO score; and (ii) removing mortgages that were originated as investment properties from eligibility for an exception to documentation. The bulletin also requires servicers to: (i) submit a short sale or DIL recommendation to Freddie Mac for approval when the borrower’s cash reserves exceed $50,000; and (ii) delay, or ensure that foreclosure counsel delays, the next legal action in the foreclosure process when such servicers receive a first complete borrower response package (BRP) more than 37 days prior to a scheduled foreclosure sale date, and the evaluation results in an offer to proceed with a short sale or DIL. Further, the bulletin states that servicers no longer are required to conduct an expedited review when a completed BRP with a short sale purchase offer is received greater than 37 days prior to a scheduled foreclosure sale date. Finally, the bulletin updates trial period plan requirements to provide that if a borrower accepts an original trial period plan offer after receiving an appeal decision, and the borrower remains eligible for the original offer, servicers must reissue the original offer with a new trial period plan due date.

Topics:  Deed-in-Lieu of Foreclosure, Foreclosure, Freddie Mac, Mortgages, Short Sales

Published In: Bankruptcy Updates, 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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